“£&  is  the  most  successful  man  who  has  the  best  information 

ENDYMION. 

LIBRARY 

UNIVERSITY  OF  ILLINOIS 

A Talk  on 


Telegraphic  Topics. 


A Bid  for  Business. 

i 


New-  York  / 

Printed  by  Francis  Hart  & Company, 


£>3  & 63  Murray  Street . 


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I 

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) 

! 


\ 


LIBRARY ! 

OF  THE  . 

UNIVERSITY  OF  ILLINOIS 


A Talk 


Telegraphic 


“ The  best  way  to  come  to  Truth  being  to  examine  things  as  they  really  are f 
and  not  to  conclude  they  are , as  we  fancy  of  ourselves , or  have 
been  taught  by  others  to  imagine — locke. 


on 

Topics. 


New  - York : 

Printed  by  Francis  Hart  dr  Company , 
6j  & 65  Murray  Street. 


^ 6 \J A>i'i  U)^ 


PREFACE. 


UPHE  first  question  the  reader  will  ask  himself  is:  “What  motive  prompted 
I the  preparation  of  this  pamphlet  ? What  object  had  the  person  in  view  who 
„ prepared  it,  and  why  is  it  sent  to  me  ? ” 

This  pointed  query  requires  a candid  answer,  not  alone  in  fairness  to  the 
reader,  but  in  order  that  all  suspicion  and  misconception  as  to  the  design  and 
aim  of  these  pages  may  at  once  be  done  away  with. 

The  motive,  then,  which  inspires  this  pamphlet  is  the  hope  of  gain — the 
same  motive  which  prompts  nine-tenths  of  all  the  actions  in  this  wide  world. 
Thus,  this  pamphlet  is  simply,  as  the  title-page  indicates,  “ a Bid  for  Business  ” ; 
and  the  expectation  is,  that  should  it  induce  business,  money  will  be  made  in  the 
shape  of  commissions,  on  the  purchase  and  sales  of  such  securities,  as  are  essen- 
tial to  those  having  means  at  their  disposal. 

The  New- York  Stock  Exchange  is  the  center  of  transactions  in  stocks, 
bonds,  and  such  like  securities  for  the  entire  United  States.  Hence,  there  is 
concentrated  there  a volume  of  business  which  better  illustrates  the  general 
. condition  than  can  be  found  at  any  other  point.  Not  long  ago  the  transactions 
'>  averaged  500,000  shares  per  day,  which  at  par  would  equal  fifty  millions  of  dol- 
lars. Within  the  past  few  weeks,  however,  there  have  been  days  when  the  sales 
did  not  reach  100,000  shares,  equal  only  to  ten  millions  of  par.  The  commissions 
earned  by  the  1,100  members  of  the  Stock  Exchange  therefore,  declined  from 
an  average  of  $113  per  day,  each,  to  $22.70  each,  the  latter  sum  being  hardly 
sufficient  to  pay  one-quarter  of  their  daily  living  expenses,  office-rent,  large 
staff  of  clerks,  etc.  This  shows  an  enormous  decline  and  indicates  an  almost 
total  cessation  of  investment  demand,  the  transactions  being  almost  exclusively 
confined  to  those  of  a speculative  character. 

In  view  of  this  decline,  with  immense  expenses  going  on,  is  it  any  wonder 
that  an  effort  should  be  made  to  create  a demand  for  the  investment  stocks 
dealt  in  by  the  members  of  the  Exchange  ? 


It  is  an  incontrovertible  fact  that  there  are  millions  and  millions  of  dollars  in 
the  country  seeking  investment.  Any  safe,  permanent,  and  profitable  securities 
that  will  yield  six  per  cent.,  with  any  prospect  of  improvement  therein  as  the 
country  improves,  ought  to  be  in  demand. 

Taking  into  account  the  vast  number  of  persons  throughout  the  country  who 
have  money  to  invest,  the  proportion  who  make  purchases  on  the  Stock  Ex- 
change of  stocks,  bonds,  and  other  securities  is  extremely  small.  A recent 
estimate  shows  that  while  there  are  a hundred  thousand  persons  seeking  invest- 
ments, less  than  ten  thousand  make  purchases  of  this  character. 

If  the  merits  of  desirable  and  profitable  securities  can  be  brought  to  the 
attention  of  investors  seeking  employment  for  their  money,  business  may  thus 


cii)  / 4 


4 


A Talk  on  Telegraphic  Topics. 


be  induced.  The  desire  to  acquire  and  profit  by  that  business  is  the  raison 
d'etre  of  this  pamphlet. 

To  this  end,  it  is  necessary  to  select  a stock  possessing  all  the  attractions  of 
safety,  permanency,  and  potentiality  of  profit,  having  prospective  growth  com- 
mensurate with  the  progress  of  the  country  itself ; a stock  which  is  in  a sense 
universal  in  its  character,  unaffected  by  local  circumstances,  selling  cheap,  and 
yet  available  in  quantities  large  enough,  to  make  worth  while  the  effort  to 
obtain  customers  for  it. 

In  looking  over  the  long  list  of  securities  offered  for  investment  none  seemed 
to  fill  all  these  requirements  so  completely  as  the  stock  of  the  Western  Union 
Telegraph  Company. 

That  this  company  has  in  sixteen  years  paid  in  dividends  over  Thirty  Millions 
of  dollars  in  cash  was  the  main  fact  which  influenced  the  selection  of  its  stock  as 
an  attractive  one  for  the  purpose  in  view.  Another  reason  for  its  selection  was 
that  there  is  no  name  more  familiar  throughout  the  entire  country  than  that  of 
the  Western  Union  Telegraph  Company.  The  omnipresent  evidences  of  its 
existence,  its  enormous  growth  in  extent,  value,  and  earning  power,  based  as  it 
is  on  a universal  want,  combine  to  make  it  a property  regarding  which  wide- 
spread interest  is  felt,  and  in  the  distribution  of  which  less  difficulty  would  be 
encountered  than  with  that  of  any  other  security  on  the  list.  Therefore  it  was 
proposed  that  all  that  could  be  said  for  and  against  the  Western  Union  stock,  as 
a security,  should  be  put  into  some  shape  accessible  to  the  vast  body  of  investors ; 
and  that  this  should  be  sent  in  the  direction,  and  to  parties  hitherto  not  possessed 
of  the  information,  in  the  hope  that  business  might  thereby  be  created. 

The  form  taken  in  the  presentation  of  these  facts  in  the  within  pages  affords 
opportunity  for  a mode  of  treatment  which  at  once  makes  the  subject  of  interest, 
and  at  the  same  time  enables  the  question  to  be  discussed  minutely.  The  con- 
versation as  hereinafter  reported  is  but  an  amplification  of  similar  ones  of  con- 
stant occurrence.  The  questions  put  and  answered  are  those  that  every  day’s 
experience  in  New  York  have  developed,  while  the  figures  given  are  derived 
from  such  sources  as  were  available  to  parties  outside  the  Company. 

The  brochure  is  submitted  with  the  foregoing  explanation.  Whether  the 
object  sought  is  a worthy  one;  whether  the  mode  adopted  is  a wise  one;  or 
whether  the  effort  succeeds  or  fails,  makes  little  difference  in  the  force  of  its 
arguments,  the  accuracy  of  its  figures,  or  the  inevitable  logic  of  its  conclusions. 
These  must  be  taken  on  their  merits,  and  the  motive  which  inspires  their  pre- 
sentation should  neither  weaken  nor  strengthen  them. 

Those  most  benefited  by  the  business  which  it  is  sought  to  create  by  this 
compilation  are  the  firms  whose  names  are  to  be  found  on  the  pages  at  the  end 
of  the  publication,  and  who,  by  inserting  their  announcements,  have  contri- 
buted toward  the  expense  of  printing  and  distributing  the  work. 

These  firms  must  be  held  in  no  way  responsible  for  the  conclusions  reached 
or  the  statements  made  in  this  pamphlet,  for  such  statements  must  stand  or  fall 
upon  their  own  merit.  The  houses  in  question  only  seek  for  business,  not  neces- 
sarily confining  themselves  to  the  stock  mentioned  in  these  pages,  but  offering 
their  services  for  the  purchase  or  sale  of  any  security  upon  the  list  of  the  New 
York  Stock  Exchange. 


AN  INTERVIEW. 


OOD-MORNING,  Mr.  Richards.  I see  you  are  at  leisure,  and  I de- 
vT  sire  to  avail  myself  of  your  kind  advice  for  a few  moments,  if  you  will 
permit  me.  I have  come  all  the  way  from  Pittsfield  to  see  some  friends 
in  New-York  to  consult  them  on  a matter  of  considerable  importance, 
not  only  to  myself,  but  to  several  of  my  neighbors ; and  knowing  that  as 
a commission  merchant  your  knowledge  is  of  a very  general  character, 
I desire  to  avail  myself  of  your  acquaintance  with  men  and  things,  and 
get  the  benefit  of  your  advice  and  experience.’' 

“ I am  pleased  to  see  you,  Mr.  Barker,  and  will  be  glad  to  serve  you. 
The  business  relations  I have  had  with  your  late  firm,  when  you  were 
actively  engaged  in  trade,  were  of  a pleasant  and  profitable  character. 
I shall  be  glad  to  be  of  use  to  you  or  to  your  neighbors  in  any  way  you 
point  out.” 

“ What  I want,  Mr.  Richards,  is  advice  with  regard  to  the  disposal 
of  a very  considerable  sum  of  money  which  hitherto  I have  had  well  in- 
vested, but  which  is  now  free,  owing  to  payments  having  matured,  and 
I am  now  anxiously  looking  around  to  place  it  again  where  it  will  yield 
me  a fair  return.  A number  of  my  neighbors  are  in  a similar  position, 
to  a greater  or  less  extent.  The  cost  of  living  is  now  much  greater 
than  it  was  five  years  ago ; the  expensiveness  of  one’s  family  and  the 
drains  upon  one’s  purse  are  greater  than  ever  before,  while  money, 
except  actively  employed  in  business,  seems  to  have  far  less  value  as  an 
earning  power  than  formerly.  The  increase  in  the  supply  of  money 
has  grown  with  much  greater  rapidity  than  the  opportunities  for  its 
safe  investment.  It  seems  impossible  at  the  moment  to  obtain 
investments  for  funds  in  channels  which  were  formerly  to  be  regarded 
as  quite  safe,  at  rates  which  will  produce  sufficient  to  live  upon  unless 
a man  is  immensely  rich.  Heretofore,  Government,  State,  and  City 
bonds  were  available  to  produce  a fair  return,  but  the  prices  of  these 


6 


A Talk  on  Telegraphic  Topics. 


securities  have  advanced  to  such  an  extent  that  really  the  amount  they 
now  yield  is  very  small,  while  real  estate  mortgages,  on  which  the 
interest  is  sufficiently  high,  are  now  so  scarce  and  frequently  so  unde- 
sirable that  one  is  forced  to  look  to  another  class  of  securities  if  one’s 
money  is  to  be  employed  to  any  profit.” 

“ Well,  Mr.  Barker,”  replied  Mr.  Richards,  “ you  are  a representative 
of  a class  which  I find  is  growing  very  rapidly  in  this  country  — a class 
who  really  do  not  know  what  to  do  with  their  money.  I have  correspon- 
dents all  over  the  country  who  are  constantly  seeking  for  information  as  to 
the  best  mode  of  placing  large  and  small  sums  of  idle  money  to  advantage. 
The  peculiar  nature  of  the  transactions  of  my  firm  and  the  contact  we 
have  with  such  varied  interests  have  caused  us  to  be  intrusted  with  a great 
deal  of  this  kind  of  business.  I have  made  it  a study  to  get  sufficient 
information  in  various  ways  to  enable  me  to  answer  such  inquiries  to 
the  best  possible  advantage.  The  gravest  question  which  presents 
itself  to  men  of  moderate  means,  next  to  the  question  of  ‘ What  shall 
we  do  to  be  Saved,’  is  ‘ What  shall  we  do  with  our  Money’  in  order 
to  produce  a fair  living.  The  old  channels  of  investment  having  to 
a large  extent  become  unprofitable,  through  being  so  crowded  with 
capital,  it  has  become  necessary  to  a vast  class  of  small  capitalists 
to  discover  other  avenues  into  which  their  money  can  be  diverted, 
where  it  will  be  at  once  safe,  accumulative,  and  certain  in  its  return. 
There  is,  of  course,  an  infinite  variety  of  attractive  investments  offer- 
ing, but  the  great  danger  is  their  experimental  character ; while  shares 
in  enterprises,  the  success  of  which  is  assured,  are  held  at  prices  so  high 
that,  as  you  say,  they  yield  a very  poor  return.  My  own  belief  is  that, 
as  a rule,  shares  in  a comprehensive,  well-managed,  incorporated  com- 
pany are  far  preferable  to  what  have  hitherto  been  regarded  as  the  safest 
kind  of  investments  based  on  individual  responsibility,  such  as  mortgages, 
etc.  Thus  a farm  mortgage  is  dependent  upon  the  life,  health,  habits,  and 
success  of  one  individual  only.  Investments  in  a savings  bank  are  depen- 
dent upon  aggregations  of  such  individuals ; for,  as  a rule,  these  institu- 
tions, outside  of  a few  cities,  have  the  bulk  of  their  means  in  mortgages. 
The  value  of  bank  stock  is  largely  dependent  upon  the  ability  of  its 
management  and  the  safety  of  its  loans.  State,  City,  and  County  bonds 
of  undoubted  character  yield  a rate  so  low  as  to  make  them  almost  unavail- 
able for  the  purpose  now  in  view.  There  are  numerous  railroad  bonds 
and  stocks  which  you  can  get  now  at  rates  that  yield  a fair  return,  though 
the  rank  and  file  of  first-class  securities  of  this  character  still  keep  high, 
while  those  that  do  offer  a temptation  to  investors,  because  of  cheapness, 
are  in  localities  more  or  less  exposed  to  unforeseen  local  contingencies, 
and  possessing  in  themselves  no  very  general  scope.  The  new  enter- 
prises offering  are  mainly  of  a competitive  character,  or  for  the  develop- 
ment of  special  localities,  the  success  of  which  yet  remains  to  be 


A Yankee  in  Search  of  a Vi enture.  7 


demonstrated.  I think  I can,  however,  suggest  to  you  a stock  of  universal 
character  independent  of  loc^l  influences  and  climatic  changes,  and 
reasonably  safe  from  hurtful  competition,  and  which,  all  other  things 
being  equal,  might  be  a very  desirable  investment.” 

u But,”  urged  Mr.  Barker,  “ I doubt  if  such  a security  can  be  found 
that  would  at  once  be  safe  and  cheap.  The  only  one  for  general  invest- 
ment, of  the  character  indicated,  is  a Government  bond,  as  applying  to 
the  whole  country.  I wish  there  were  other  securities  of  as  general  a 
character.” 

“ I can  recall  none  equally  universal,”  Mr.  Richards  responded, 
‘ ‘ except  the  stock  of  the  Western  Union  Telegraph  Company;  and 
my  attention  has  been  very  much  directed  of  late  to  that  property.” 

“ I,  too,  have  heard  much  discussion  of  late  regarding  this  stock,” 
Mr.  Barker  replied;  “ but  the  objections  continually  urged  against  it  as 
an  investment  are  so  numerous  and  so  strong  that  I have  hesitated  to 
say  much  about  it.  My  information  regarding  it  is  somewhat  contra- 
dictory ; I would  like  to  have  your  opinion  about  it,  and,  if  possible,  the 
result  of  some  investigation  of  it  by  you.  I should  require  to  be  satisfied 
on  a good  many  points,  though,  before  I put  my  money  into  that 
stock.” 

“ Leaving  out  of  the  question  Government  bonds,”  the  commission 
merchant  replied,  “ with  the  exception  of  the  Western  Union  stock,  all 
other  securities  are  local.  There  is  no  other  stock  which  represents 
property  so  widely  diffused,  the  receipts  of  which  are  derived  from 
localities  so  infinite  in  number,  and  whose  income  is  less  liable  to  local 
or  special  unfavorable  influences.  I suppose  it  is  because  the  name  of 
Western  Union  is  so  familiar  in  all  parts  of  the  country,  by  its  connection 
with  the  entire  community,  that  so  much  inquiry  arises  in  relation  to  its 
stock  by  just  such  people  as  yourself ; and  I am  told  that  the  number  of 
investors  in  small  amounts  who  seek  it  is  much  greater  in  proportion  than 
obtains  in  any  other  stock  available.  Frequent  inquiries,  such  as  yours, 
have  caused  our  firm  to  investigate  Western  Union  to  some  extent,  and 
we  have  become  so  much  interested  in  it,  as  well  for  our  own  sake  as  for 
that  of  our  friends,  that  we  have  now  got  about  all  the  information  avail- 
able to  casual  inquirers,  and  will  get  all  we  can  hereafter  for  the  purpose 
of  being  thoroughly  posted.  The  stock  pays  six  per  cent.,  and  at  the 
going  price  now,  say  eighty-five,  yields  about  seven  per  cent.  Divi- 
dends have  been  paid  for  a great  many  years  with  regularity,  and  it  is 
claimed  by  those  familiar  with  the  enterprise  that  seven  per  cent., 
and  probably  eight  per  cent.,  will  be  eventually  earned  and  paid  on 
its  present  capital  of  eighty  millions.  This,  of  course,  makes  it  a 
very  attractive  stock,  and  if  parties  could  be  thoroughly  satisfied  as  to 
the  safety  and  permanence  of  that  profit  there  would  no  doubt  be  a 
large  absorption  of  it  by  investors.  But  on  these  points  you  must 


8 


A Talk  on  Telegraphic  Topics. 


judge  for  yourself.  If  there  is  anything  we  can  do  to  aid  you  to  a 
decision  in  regard  to  this  or  any  other  stock  we  shall  be  glad  to 
assist  you  in  the  matter.  One  thing  is  certainly  true  of  Western  Union: 
whatever  its  possible  demerits  may  be,  that  there  is  not  a security  in 
the  entire  list  that  has  yielded  continuously  a better  return.  I have 
some  friends  who,  many  years  ago,  became  possessed  of  some  of  the 
stock,  and  have  continuously  held  it.  They  have  not  only  had  their 
dividends  with  the  greatest  regularity,  but,  by  the  steady  growth  of  the 
property,  the  addition  of  betterments,  and  the  results  of  combinations, 
their  stock  has  continually  enhanced  in  value.  Although  it  is  quoted 
ten  or  fifteen  per  cent,  below  par,  because  of  the  increase  in  the  amount 
of  capital,  the  general  result  to  continuous  holders  has  been  uniformly 
extremely  favorable.  Judging  the  future  by  the  past,  there  seems  no 
reason  to  expect  any  other  result  to  those  who  make  an  investment  in 
the  property.” 

“ I am  astonished,  Mr.  Richards,”  said  Mr.  Barker,  quickly,  “to  find 
you  such  an  ardent  advocate  of  a stock  for  permanent  investment 
against  which  so  much  has  been  urged,  and  I am  curious  to  learn  how 
a man  of  your  prudence  and  well-known  conservatism  can  justify  an 
opinion  so  favorable  as  you  have  just  expressed.  For  instance,  is  it  not 
true  that  the  property  of  the  Western  Union  Telegraph  Company  is 
of  the  most  fragile  character  in  the  world  ? Are  not  the  poles  and  wires 
scattered  broadcast  over  the  country,  almost  utterly  valueless  as  a real- 
izable asset,  and  if  sold  by  any  of  the  ordinary  modes  of  realization, 
would  they  bring  more  than  a tithe  of  their  original  cost  ? ” 

“To  a certain  extent  you  are  right,”  Mr.  Richards  replied;  “but 
you  must  remember  that  these  poles,  wires,  instruments,  and  batteries, 
represent  a capacity  to  do  the  business  of  the  country  quite  as  effectually 
as  do  the  rails,  locomotives,  and  station-houses  of  the  New- York  Cen- 
tral, Pennsylvania,  or  Union  Pacific  Railroads  in  the  localities  they 
respectively  serve.  There  is  nothing  more  essential  to  the  existence 
and  success  of  the  entire  commercial  community  than  facility  of  com- 
munication; it  is  the  very  life-blood  of  enterprise,  and  without  the 
Post-Office  and  the  Telegraph  there  would  be  an  end  of  progress,  com- 
mercial and  social.  Obliterate  these  two  agencies  and  the  Middle  Ages 
have  come  again.  Any  individual  or  company  owning  the  Post-Office, 
with  the  right  to  charge  a profitable  price  for  carrying  each  letter  to  its 
destination,  would  ‘ possess  the  potentialities  of  a fortune  beyond  the 
dreams  of  avarice. 1 Yet  in  what  respect  does  the  Telegraph  Company 
differ  from  the  Post-Office  in  capacity  for  earning  ? Indeed,  the  Tele- 
graph is  the  essential  element  where  instantaneous  service  is  required. 
If  communication  is  as  necessary  to  the  body  politic  as  food  and  air 
are  to  the  individual,  and  if  a reasonable  profit  can  be  exacted  in  the 
supply  of  that  universal  need,  it  would  seem  that  no  investment  need 


The  Man  who  Doubts. 


9 


be  considered  a safer  one  than  in  an  enterprise  having  this  for  its 
mission.” 

“ What  you  say,”  said  Mr.  Barker,  musingly,  “is  very  interesting; 
and,  if  all  things  else  were  equal,  would  make  an  investment  of  this 
character  most  attractive ; but  the  very  extent  and  universal  character 
of  the  undertaking  presupposes  the  possibility  of  success  to  ventures 
which  should  compete  for  a share  in  a prize  so  great,  and  it  seems  to  me 
the  door  to  competition  is  open  wider  than  in  enterprises  of  a more  local 
character.” 

“At  the  first  glance,”  Mr.  Richards  replied,  “what  you  say  seems 
possible ; but  experience  does  not  prove  that  competition  in  telegraphy 
has  been  at  all  successful,  especially  when  confined  to  localities.  Half 
a dozen  postal  departments,  or  a Post-Office  Department  in  each  State 
in  the  Union,  would  not  be  nearly  as  advantageous  or  successful  as  a 
single  postal  department  operated  from  a center  by  a single  executive 
staff.  One  of  the  elements  of  success  in  the  Western  Union  Telegraph 
Company  is  the  fact  that  it  is  almost  universal  in  its  comprehensive 
scope.  It  is,  as  you  perhaps  know,  a combination  of  numerous  com- 
panies, some  sixty  in  number,  in  various  parts  of  the  country,  all 
merged  into  one  common  organization.  The  postal  department  at 
Washington  is  not  more  absolute  in  its  control  of  the  post-office  in  the 
remotest  part  of  the  country  than  is  the  Executive  Department  of  the 
Western  Union  Company  at  New  York  in  command  of  its  offices  and 
staff  scattered  through  the  length  and  breadth  of  the  land.  If  the  post- 
office  is  to  be  regarded  as  the  first  means  of  communication  and  of 
universal  application  in  its  slow  way,  at  a rate  limited  by  law,  which 
makes  it  barely  self-sustaining,  certainly  the  Western  Union  Telegraph 
Company  must  be  regarded  as  the  second  means  of  communication.  It 
has  possibilities  of  almost  unbounded  increase,  and  at  rates  or  tolls 
unlimited  by  law,  susceptible  of  yielding  on  every  single  item  of  business 
done  a reasonable  profit.  The  number  of  messages  now  sent  annually 
is  over  thirty  millions.  If  on  every  one  of  these  messages  a certain 
profit  is  made,  one  can  very  readily  understand  what  an  enormous 
revenue  a company  having  control  of  business  to  this  extent  has  assured 
to  it.” 

“But,”  urged  Mr.  Barker,  “the  very  fascinations  of  such  an  enter- 
prise make  it  probable  that  another  company,  equally  comprehensive  with 
the  Western  Union,  may  seek  to  occupy  the  ground  it  now  possesses.  At 
any  rate,  between  the  great  centers  of  commerce  a profit  might  be 
found  in  competing  lines;  or  such  competition  might  be  offered  as 
would  divide  the  business  and  reduce  the  rate  to  a figure  which  would 
destroy  the  chance  of  dividends.” 

“ I must  admit,”  said  Mr.  Richards,  “ that  the  possibilities  of  com- 
petition seem  at  first  sight  great,  but  thus  far  a most  singular  fatality 


10 


A Talk  on  Telegraphic  Topics. 


has  attended  every  effort  of  this  kind.  I believe  it  is  a fact  that,  with 
one  exception  only,  no  opposition  telegraph  company  has  ever  paid  its 
expenses . Taking  the  numerous  efforts  of  this  kind  into  account, 
there  has  been  less  damage  done  to  the  Western  Union  Company  than 
has  come  from  competition  to  any  other  enterprise  of  any  magnitude  in 
the  country.  The  past  is,  of  course,  our  only  guide  in  matters  of  this 
kind;  no  prophet  can  predict  with  half  the  certainty  that  the  past 
predicts,  and  the  prospect  of  profit  for  any  competition  of  this  kind  is 
even  less  to-day  than  ever  before.  It  is  dawning  upon  all  who  have 
closely  observed  this  question,  that  the  only  possibility  of  success  in 
opposition  telegraphy  is  the  profit  obtained  by  absorption  and  by 
amalgamation.  I am  told  that  it  has  been  determined  that  no  further 
amalgamations  or  consolidations  are  to  take  place,  so  that  the  chances 
of  opposition  enterprises  are  more  remote  than  ever  before.  ” 

“ You  seem  to  be  unusually  well  posted  on  this  subject,  Mr.  Richards, 
but  I confess  I am  somewhat  surprised  that  you  take  such  a favorable 
view  of  the  position  of  the  Western  Union  Company,  which  I had  come 
to  regard  as  the  Ishmael  of  stocks.  It  is  true  I got  my  prejudices  from 
rumor  and  hearsay,  and  I should  have  remembered  that  it  has  been 
said,  ‘The  multitude  is  always  wrong.’  I am  free  to  admit  that  you 
may  be  right  and  all  the  gossip  I have  heard  erroneous.  I should  like 
to  pursue  the  matter  further,  but  I have  already  sufficiently  trespassed 
on  your  valuable  time,  and  will  take  the  liberty  of  again  communicating 
with  you  in  relation  to  it.  I propose  to  make  a considerable  deposit 
with  your  firm  shortly,  and  will  want  to  know  further  in  relation  to 
Western  Union  and  other  stocks,  the  prospects  of  Iowa  bonds,  etc,” 

“ I am  somewhat  surprised  myself,”  Mr.  Richards  replied,  “ to  have 
been  betrayed  into  arguing  so  strongly  in  favor  of  what  appears  to  be 
a monopoly  of  a very  important  element  in  the  commercial  fabric  of  the 
country.  The  only  way  I can  account  for  speaking  so  glibly  upon  the 
point  is,  that  the  subject  has  occupied  a good  deal  of  my  time  of  late, 
owing  to  discussions  which  have  arisen  in  my  immediate  circle  of 
acquaintance  regarding  the  telegraph  question;  and  having  a most 
intimate  friend  somewhat  interested  financially  and  otherwise  in  the 
question,  and  who  has  been  with  me  investigating  its  merits.  My 
friend  is  about  to  prepare  an  elaborate  report  for  some  correspondents 
of  his  in  England  on  the  question  of  the  safety,  permanency,  and  profit- 
ableness of  investments  in  American  Telegraph  property.  If  you  like, 
when  this  report  is  ready,  I will  send  you  some  extracts  from  it  if  I can 
get  permission  so  to  do. 

“There  are,  of  course,”  continued  Mr.  Richards,  “numerous  other 
investments  offered  to  you  in  this  market,  and  I shall  be  happy  to  inquire 
into  any  of  them  for  you,  but,  really,  I know  of  few  which  at  the  present 
moment  holds  out  the  prospect  of  returns  so  certain,  so  ample,  so  per- 


The  Man  who  Reasons. 


11 


manent,  and  at  the  same  time  likely  to  increase  so  rapidly,  as  a moderate 
investment  in  the  stock  of  the  Western  Union  Telegraph  Company.  At 
a price  below  par,  it  yields  a return  greater  than  any  similar  first-class 
security.  I heard  it  remarked  the  other  day  that  Mr.  Gould  had 
just  as  good  an  income  from  his  twenty-five  millions  of  Western  Union 
stock  as  Mr.  Vanderbilt  had  from  his  fifty  millions  of  Government  bonds. 
Mr.  Gould’s  stock,  at  an  average,  say,  of  eighty-five,  yields,  at  six  per 
cent.,  as  much  as  the  Government’s,  which  cost  Mr.  Vanderbilt  one 
hundred  and  ten  and  pay  only  four  per  cent.  There  is  no  possibility 
of  the  latter  increasing  in  earning  power,  while  the  possibilities  of  Western 
Union  are  limited  only  by  the  growth  and  resources  of  the  country,  the 
increase  of  the  business,  and  the  success  of  its  management.  By  growth 
of  population  and  immigration  we  gain  ten  thousand  people  every  day  ! 
Each  unit  added  to  the  population  adds  to  the  value  of  Western  Union 
stock.  The  company  taps  the  pockets  of  all,  directly  or  indirectly,  while 
it  goes  without  saying  that  every  new  consumer  adds  to  the  volume  of 
business  of  the  country,  inuring  to  the  benefit  of  telegraphy,  the  indis- 
pensable adjunct  of  trade.  If  a man  as  shrewd  as  Mr.  Gould  is  known 
to  be  is  content  to  hold,  say,  one  quarter  of  his  wealth  invested  in  this 
single  enterprise,  it  is  likely  to  be  a sound  and  healthy  one.  He  has 
surrounded  himself  with  a staff  of  managers  of  the  highest  possible  grade, 
and  a Board  of  Directors,  probably  the  most  wealthy  and  influential  ever 
got  together  in  this  or  any  other  country.  These  are  pretty  good  evi- 
dences of  the  safety  of  the  undertaking.  Aside  from  this,  the  number 
of  investors  in  Western  Union  is  constantly  increasing,  and  I am  told 
more  of  the  stock  is  being  absorbed  in  small  quantities,  by  investors  in 
sections  of  the  country  more  numerous,  than  any  other  stock  in  the  list. 
I shall  be  happy  to  pursue  the  matter  further  if  you  like,  and  get  you  more 
explicit  and  late  information  about  this  and  any  other  stock  you  feel  an 
interest  in.  We  shall  be  pleased  to  receive  from  you  any  deposit  you 
may  make,  and  will  do  our  best  to  advise  you  as  to  its  disposition.” 

Mr.  Barker  thanked  the  commission  merchant  for  his  courtesy  and 
attention,  apologized  for  having  occupied  so  much  of  his  time,  and 
withdrew. 


CORRESPONDENCE. 


Pittsfield,  Mass.,  May  io,  1882. 
John  Richards,  Esq.,  New-York  City,  N.  Y. 

My  Dear  Sir:  When  I had  the  pleasure  of  seeing  you  in  New-York  a week 
or  ten  days  ago  you  were  good  enough  to  say  that  you  would  forward  to  me 
some  extracts  from  a report  that  was  to  be  made  upon  the  safety,  permanency,  and 
profitableness  of  the  stock  of  the  Western  Union  Telegraph  Company  as  an  in- 
vestment, but  as  yet  I have  not  heard  from  you.  I have  not  yet  made  any  move 
in  regard  to  the  purchase  of  securities  to  absorb  the  deposit  in  the  hands  of  your 
firm,  and  as  it  is  necessary  that  something  should  be  done  soon,  I shall  be 
obliged  if  you  will  send  to  me,  when  convenient,  the  extracts  referred  to.  I have 
discussed  with  my  neighbors  the  desirability  of  an  investment  in  Western  Union 
stock.  I meet  with  much  opposition  and  criticism,  and  having  become,  from 
what  you  told  me,  somewhat  of  an  advocate  of  that  enterprise,  I should  like  to  be 
put  in  possession  of  all  that  can  be  said  both  for  and  against  it.  I am  particu- 
larly anxious  to  be  fortified  with  some  statistics  as  to  the  growth  of  the  business, 
the  cost  of  construction,  expenses  of  maintenance,  and  the  profit  possible  as  the 
result  of  good  management,  and  honest  administration  of  its  affairs.  I shall  be 
glad  to  compensate  you  for  the  trouble  of  procuring  any  facts,  and  will  take  it  as 
a favor  if  you  will  give  special  attention  to  this  duty. 

You  spoke  of  knowing  some  expert  who  was  moving  in  this  matter.  I shall 
be  glad  to  have  the  benefit  of  his  knowledge  and  such  inquiry  as  he  makes.  You 
may  charge  to  my  account  any  reasonable  sum  you  expend  in  this  direction 
Thanking  you  for  all  your  kind  interest  in  my  affairs,  I am  very  truly  yours, 

G.  Francis  Barker. 

New-York,  May  15th,  1882. 

G.  Francis  Barker,  Esq.,  Pittsfield,  Mass. 

My  Dear  Barker  : Your  letter  is  received,  and  I hasten  to  comply  with  it  by 
saying  that  since  our  conversation  some  time  ago  in  relation  to  the  Western 
Union  Telegraph  Company,  I have  become  more  than  ever  interested  in 
the  question  of  the  desirability  of  possessing  some  of  its  stock.  As  I recall 
that  conversation,  I indulged  in  a good  many  generalities  which  I had  reached 
through  some  reflection  on  the  subject  and  conversation  with  others,  but  the 
anxiety  and  curiosity  you  displayed,  and  the  frequency  of  the  demand  for  infor- 
mation before  and  since,  have  caused  me  to  go  into  the  question  in  more  detail  than 
I had  been  able  to  do  before  we  met. 


The  Youngest  Atlantic  Cable. 


13 


I am  glad  to  say  that  the  favorable  conclusions  I then  reached  as  to  the 
safety  of  this  stock  and  its  desirability  have  rather  been  strengthened  than  other- 
wise. The  report  of  my  friend,  who  in  some  sense  is  an  expert,  as  to  the  progress 
of  the  business  of  the  Western  Union  Telegraph  Company,  its  prosperity  and 
probable  future  prospects,  has  been  completed,  and  I hope  to  be  able  to  enclose 
in  this  letter  some  extracts.  This  report  originated  in  the  request  of  certain 
English  correspondents  who  have  had  their  attention  directed  to  the  desirability 
of  being  posted  in  Western  Union  stock.  A considerable  British  demand,  it  is 
thought,  is  likely  to  set  in  for  this  security  from  the  fact  that  it  is  about  to  be  placed 
upon  the  London  Stock  Exchange,  and  a transfer  office  is  about  to  be  opened  at  the 
house  of  J.  S.  Morgan  & Co.,  the  bankers,  successors  of  George  Peabody  & Co. ; 
also  probably  because  two  very  prominent  English  telegraph  men  are  likely  to 
be  placed  on  the  Western  Union  Board  of  Directors  to  represent  the  organiza- 
tion at  London.  These  two  gentlemen  are  Mr.  John  Pender,  Chairman  of  the 
Direct  Cable  Co.,  and  Mr.  Weaver,  Chairman  of  the  Anglo-American  Cable  Co. 

You  are  probably  aware  of  the  fact  that  the  American  Cable  Company,  which 
has  just  completed  two  very  fine  cables  across  the  Atlantic,  the  bulk  of  which  is 
owned  by  the  parties  interested  in  the  Western  Union,  has  recently  formed  a 
pooling  arrangement  with  the  Anglo,  Direct,  and  French  Cables,  and  that  the 
eight  or  nine  existing  Atlantic  Cables  are  now  being  operated  in  harmony.  Prior 
to  this  arrangement  the  Western  Union  Company  became  the  lessee  of  the  two 
American  Cables,  and  it  is  with  the  Western  Union  Company  that  this  arrange- 
ment is  made,  by  which,  it  is  said,  it  will  clear  a profit  of  a quarter  million  dollars 
a year  at  the  important  advance  recently  established  in  cable  rates.  So  that  the 
extension  of  the  operations  of  the  Western  Union  Company  by  this  means  to 
Great  Britain  makes  it  more  than  ever  an  important  element  in  the  machinery  of 
communication  between  the  Old  and  the  New  Worlds,  and  is  likely  to  direct  a 
great  deal  of  attention  to  its  stock  in  Europe  as  an  article  for  investment.  Cable 
and  Telegraph  stocks  have  long  been  favorite  securities  in  England,  and  in  con- 
sequence of  the  election  of  these  two  prominent  and  successful  promoters  of 
telegraph  enterprises,  and  the  facilities  now  afforded  for  dealing  in  the  stocks,  a 
special  effort  has  been  made  to  obtain  very  specific  and  full  information,  my  friend 
being  employed  specially  for  that  purpose.  You  will  therefore  see  the  motive 
which  has  inspired  the  obtaining  of  these  details,  and  when  I say  to  you  that  the 
party  employed  is  well  known  for  his  reliability  and  shrewdness,  you  will  under- 
stand the  value  to  be  placed  upon  the  representations  he  makes. 

I am,  truly  yours,  John  Richards. 


LEADING  FACTS 


REGARDING  THE 


WESTERN  UNION  TELEGRAPH  COMPANY. 


IN  view  of  the  probability  of  considerable  inquiry  being  made,  in 
London  and  elsewhere,  regarding  the  Western  Union  Telegraph 
Company,  I have  been  requested  to  compile  and  put  into  accessible 
shape  the  leading  facts  regarding  this  Company,  the  object  sought 
being  to  answer  such  questions  as  will  likely  be  put  by  intending  pur- 
chasers, to  English  brokers  and  others,  who  will  earn  a commission 
upon  the  business  transacted. 

While  not  professing  to  be  an  expert  in  the  investigation  of  com- 
panies of  this  character,  and  having  no  claim  upon  the  Company  or  its 
officers  for  special  information,  I will  nevertheless  endeavor  to  give  to  you 
suclu  leading  facts  as  are  apparent,  some  as  extracts  from  reports,  and 
statistics  of  a sufficiently  definite  character,  to  enable  parties  to  judge 
generally  as  to  the  value  of  the  security  offered. 

I have  for  a great  many  years  closely  observed  the  operations  of  this 
and  kindred  companies,  invariably  preserving  such  statistics  as  were 
made  public.  Without  being  specially  interested  in  the  Western  Union 
Company,  though  holding  some  of  its  stock,  I have  no  object  except  to 
develop  such  facts  as  may  be  useful  to  parties  who  require  them,  for 
which  I shall  expect  compensation,  in  proportion  to  the  labor  involved, 
from  those  for  whom  the  information  is  primarily  designed. 

Extent  of  Business. — In  the  first  place,  it  is  important  to  know 
that  the  Western  Union  Telegraph  Company  is  the  largest  and  most 
comprehensive  telegraph  organization  that  ever  existed ; that  it  covers 
a wider  extent  of  territory,  and  affords  necessary  facilities  to  a larger 
number  of  persons,  than  does  any  other  private  organization  in  the 
world.  Its  receipts  are  derived  from  points  more  numerous  than  the 


Large  but  Legitimate  Capitat. 


15 


income  of  anything  else,  except  the  Government  itself ; and  the  entire 
population  of  this  country,  now  amounting  to  more  than  fifty  millions, 
have  learned  to  become  almost  as  dependent  upon  it  as  they  are  upon 
the  postal  facilities  furnished  by  the  Government.  The  growth  in  the 
use  of  the  facilities  of  this  Company  has  been  much  more  rapid  than  the 
growth  of  the  population,  or  the  increase  in  the  national  wealth.  Thus, 
in  1871  the  number  of  messages  sent  did  not  exceed  ten  millions;  while 
in  1881  they  much  exceeded  thirty  millions  — an  increase  of  two  hun- 
dred per  cent,  in  the  ten  years,  the  greater  number  of  which  were  years 
of  depression.  This  is  an  indication  of  progress  that  hardly  any  other 
business  can  show. 

Capital. — In  order  to  attain  to  a business  of  such  magnitude,  and 
to  so  completely  cover  the  country,  as  it  now  does,  a series  of  events 
have  occurred  which  makes  the  history  of  the  Company  mainly  a history 
of  consolidations  and  absorptions,  which  has  caused  its  capital  to  grow 
with  a rapidity  which  the  cost  of  construction  would  hardly  justify,  and 
which  fact  is  now  the  cause  of  considerable  doubt  as  to  whether  or  not 
the  property  possessed  represents  adequately  this  enormous  capital, 
which,  as  it  now  exists,  is  Eighty  Millions  of  dollars  — the  large  increase 
having  taken  place  within  the  last  few  years.  There  is  represented  to 
be  a great  deal  of  what  is  called  “ water”  in  this  eighty  millions,  and 
it  is  alleged  that  for  one-third  or  one-half  the  sum  the  whole  plant  and 
construction  of  the  Company  could  be  replaced.  But  the  same  may 
be  said  regarding  almost  any  business  which  has  taken  years  to  build 
up,  and  which  yields  a return  at  all  commensurate  with  the  expenditures 
incurred.  The  amount  of  capital  which  it  has  taken  to  establish  the 
postal  facilities  of  this  country  is  vastly  greater  than  that  which  the 
Western  Union  Company  now  represents  and  pays  dividends  upon; 
while  the  earning  power  of  the  latter  is  infinitely  larger  than  that  of 
the  Post-office  Department,  which  in  its  turn  has  nothing  to  show  in 
the  shape  of  assets  for  its  immense  expenditure. 

The  great  trunk  lines  of  railroad  are  all  represented  by  capitalized 
and  bonded  indebtedness  aggregating  much  larger  sums  in  many  cases 
than  the  capital  of  the  Western  Union  Company,  and  there  is  hardly 
one  of  them  but  could  be  replaced  now  for  the  same  proportionate 
amount  which,  it  is  alleged,  would  suffice  to  duplicate  the  Western 
Union  lines.  The  sum  at  which  the  telegraph  system  of  the  United 
Kingdom  was  taken  over  by  the  Government  of  that  country  ought  to 
form  a fair  basis  for  an  estimate  of  the  value  of  the  property  of  the 
Western  Union  Company.  In  round  figures  the  British  Government 
paid  fifty  millions  of  dollars  for  a system  not  one-quarter  as  large  as  the 
Western  Union  Telegraph  Company — the  number  of  miles  of  wire  in 
Great  Britain  being  slightly  over  100,000,  while  the  Western  Union  has 


16 


A Talk  on  Telegraphic  Topics. 


in  miles  of  wire  now  nearly  350,000.  If  the  Government  of  the  United 
States  were  to  absorb  the  Western  Union  system,  as  the  conservative 
Government  of  England  absorbed  the  British  system,  the  capital  of  the 
Western  Union  would  stand  almost  being  doubled  up  to  one  hundred 
and  sixty  millions ; for  if  it  cost  the  British  Government  fifty  millions 
for  one  hundred  thousand  miles  of  telegraph,  the  United  States  Govern- 
ment, on  the  same  basis,  would  have  to  pay  one  hundred  and  sixty 
millions  for  three  hundred  and  fifty  thousand  miles  of  Western  Union 
lines,  as  they  now  exist.  Therefore,  the  capital  of  the  Western  Union, 
at  the  present  figure,  with  these  points  in  view,  does  not  seem  so 
excessive. 

Earning  Capacity. — The  value  placed  upon  a property  is  regu- 
lated by  its  earning  capacity.  Especially  should  this  be  the  case  when 
it  has,  virtually,  exclusive  privileges  — an  almost  sole  possession  of 
territory  on  which  others  cannot  encroach  without  serious  loss.  The 
earning  capacity  of  the  Western  Union  Telegraph  Company,  compared 
with  its  capital,  is  greater  than  that  of  any  other  organization  in  this 
country  whose  stock  is  offered  at  all  freely  to  the  public,  as  will  be  seen 
’ by  statistics  herewith  inserted.  The  Company  is  earning  now  six  mill- 
ions of  dollars  a year,  even  allowing  for  a very  considerable  diminution 
in  the  rates  for  transmitting  messages,  and  after  making  most  liberal 
provisions  for  renewals  and  extensions.  If  six  millions  of  dollars  a year 
profit  can  be  earned,  it  justifies  a capitalization  of  eighty  millions, 
because  this  amount  is  equal  to  over  seven  per  cent,  per  annum,  and  it 
only  requires  $4,800,000  to  make  a dividend  of  six  per  cent,  on  the 
existing  capital.  While,  therefore,  the  capital  seems  large,  representing, 
as  it  does,  property  of  a fragile  and  perishable  character,  the  foregoing 
considerations  should  not  be  lost  sight  of.  To  this  should  be  added  the 
most  important  fact — that  the  good-will,  existence,  and  organization  of 
a business  so  vast  and  comprehensive  are  of  immense  value,  as  it  would 
take  many  years  to  create  a traffic  of  equal  volume. 

But,  besides  all  this,  the  capital  represents  such  values  as  are  found 
in  the  vast  number  of  existing  contracts,  for  privileges  and  franchises, 
mostly  exclusive,  with  more  than  eight  hundred  railroad  companies. 
By  a division  of  expenses,  and  a joint  use  of  line  and  offices,  vast 
areas  of  country  are  made  tributary  at  a very  small  expense  to  the  reve- 
nues of  the  Telegraph  Company,  while  the  low  cost  of  maintenance  of 
the  lines  on  roads  so  frequently  traversed,  and  under  constant  surveil- 
lance, is  an  advantage  that  is  obvious. 

A great  value  must  also  attach  to  the  patents  which  the  Western 
Union  Company  controls,  and  on  which  vast  sums  have  been,  expended. 
It  is  said  by  a shrewd  observer,  that  electrical  science  has  gone  back  one 
hundred  years  in  England,  owing  to  the  Government  having  assumed 


Bonded  Indebtedness. 


17 


control  of  the  telegraphic  system,  and  affording  little  encouragement 
to  invention  and  progress  in  this  most  wonderful  and  useful  depart- 
ment of  science.  This  remark  has  to  be  completely  reversed  when 
referring  to  the  Western  Union  Company,  which,  with  a liberality  for 
which  it  has  been  occasionally  blamed,  has  done  all  in  its  power  to 
develop  in  the  highest  degree  the  possibilities  of  the  electric  current. 
It  has  its  reward  to-day  in  being  able  to  do  a business  over  regions 
of  country  of  vast  extent,  of  a volume  and  magnitude  that  even  ten 
years  ago  seemed  an  utter  impossibility. 

All  these  considerations  must  enter  into  any  estimate  of  the  value  of 
the  property  of  a company  like  this.  In  view  of  what  it  has  accom- 
plished, what  it  can  earn,  and  the  impossibility  of  duplicating  its  advan- 
tages for  any  amount  of  money,  the  sum  of  eighty  millions  does  not 
seem  a very  excessive  amount. 

Bonds  and  Indebtedness. — The  indebtedness  of  the  Western 
Union  Company  is  exceedingly  small.  The  bonds  existing  upon  its 
buildings  in  New  York  represent  the  bulk  of  its  bonded  indebtedness, 
which  now  amounts  to  only  six  million  dollars,  the  interest  on  which 
is  nearly  defrayed  by  the  rental.  By  the  operations  of  a sinking 
fund  this  amount  is  being  gradually  reduced.  These  bonds  are  in 
great  favor,  and  are  almost  impossible  now  to  obtain  at  less  than 
120.  No  other  indebtedness  exists  in  any  form.  It  will  be  seen, 
therefore,  that  the  entire  revenues,  after  the  payment  of  expenses, 
extensions,  and  renewals,  are  available  for  dividend  purposes.  There 
is  no  company  of  anything  like  equal  magnitude  in  the  country,  less 
embarrassed  by  fixed  charges  or  obligations  than  the  Western  Union 
Company ; hence  the  shareholders  get  all  the  benefits  which  arise 
from  the  progress  of  its  business,  and  are  able  to  control  and  direct  its 
receipts  to  their  own  benefit.  The  position  of  the  company  is  some- 
what unique  in  this  respect,  and  makes  the  stock  all  the  more  desirable 
as  an  investment. 

Statistics. — The  growth  and  increasing  value  of  the  company’s 
property,  the  number  of  messages  sent,  its  receipts  of  money,  expenses 
and  profits,  are  a better  basis  by  which  to  judge  of  the  merits  of  the 
stock  than  any  number  of  arguments  or  assertions.  The  figures,  reveal- 
ing all  these  points  for  a series  of  years,  are  available  in  the  annual 
reports  of  the  company,  and  an  extract  therefrom  is  herewith  inserted, 
condensed  as  much  as  possible.  The  table  given  here  is  somewhat 
different  from  that  ordinarily  published,  and  is  taken  from  the  American 
Almanac,  with  such  additions  as  are  necessary  to  bring  it  down  to  a 
date  more  recent,  and  is  as  follows : 


2 


Statement  showing  the  Mileage  of  Lines  and  Wires,  Number  of  Offices,  and  Traffic  of  the 
Western  Union  Telegraph  Company  for  each  Year,  from  June  30,  1866,  to  June  30,  1881 : 


is  A Talk  on  Telegraphic  Topics. 


A Council  of  Notables. 


19 


Attention  is  specially  directed  to  the  remarkable  increase  which  has 
taken  place  in  every  item  of  importance  contributory  to  the  prosperity  of 
this  great  company.  Thus,  the  receipts  since  1 867  have  been  increased  from 
six  to  fourteen  millions,  and  this  year  will  reach  sixteen  millions,  show- 
ing a gain  of  150  per  cent.,  while  the  expenses  have  increased  only  from 
$3,900,000  to  $6,900,000.  The  profits  have  more  than  doubled,  while  the 
average  tolls  per  message  have  been  materially  decreased,  and  the  cost 
of  transmitting  the  same  declined  in  about  a like  proportion.  It  may  be 
safely  asserted , that  a photograph  of  the  business  of  no  other  company 
in  the  world , presented  in  such  amplitude  as  the  foregoing  table , can 
exceed  it  in  all  the  elements  of  steady  growth , increased  revenues , pro- 
portionate reduction  in  expenses , and  growth  in  profits  ; while  at  the 
same  time  affording  facilities  of  such  an  extraordinary  character  to  the 
public , at  rates  diminishing  with  sufficient  rapidity  to  constantly  warrant 
an  increased  use  of  this  important  agency . 

If  the  future  of  telegraphy  in  North  America  is  to  be  judged  by  the 
past,  there  is  no  element  in  the  social  and  commercial  fabric  which  will 
have  a greater  development.  And  if  the  prosperity  of  the  Western 
Union  Company,  as  indicated  by  the  foregoing  figures,  is  hereafter  to 
be  equal  to  that  which  it  has  enjoyed  in  the  last  quarter  of  a century, 
then  there  is  no  security  more  safe  and  more  desirable  than  the  shares 
into  which  the  property  is  divided.  It  seems  impossible  to  get  away 
from  a favorable  conclusion  regarding  the  future  of  the  Company,  after 
closely  analyzing  the  progress  it  has  made  in  the  past,  as  indicated  in 
these  figures.  Whatever  justification  there  may  be  for  the  doubts,  criti- 
cisms, and  apprehensions  regarding  the  future,  certainly  the  figures  of 
the  past  are  incontrovertible  as  indicating  its  claim  to  confidence  in  its 
earning  power  and  its  increasing  value. 

Directory  and  Staff. — The  past  and  present  success  of  a business 
enterprise,  and  its  security  for  the  future,  are  indicated  always  by  the 
class  of  men  directing  its  policy  and  employed  in  the  administration  of 
its  affairs.  If  judged  by  this  standard  the  Western  Union  Telegraph 
Company  must  take  high  rank.  Its  board  of  directors  includes  a larger 
number  of  wealthy  and  successful  men  than  can  be  found  at  the  council 
table  of  any  other  company  in  this  country,  or  indeed  in  the  world.  It 
comprises  twenty-nine  members,  and  is  most  thoroughly  representative 
of  the  varied  financial  and  commercial  interests  of  the  country.  Aside 
from  the  individual  worth  of  these  directors,  estimated  at  from  three  to 
four  hundred  millions  of  dollars,  they  administer  and  control  interests 
representing  in  the  aggregate  infinitely  greater  sums,  employed  in  all 
the  methods  of  transportation,  and  in  every  mercantile  pursuit.  In 
short,  with  a few  exceptions,  the  Directory  is  a body  of  magnates  such  as 
has  never  before  been  got  together  in  the  management  of  one  enterprise. 


20 


A Talk  on  Telegraphic  Topics. 


In  order  that  the  reader,  especially  from  abroad,  may  perfectly  under- 
stand who  these  gentlemen  are,  their  names  are  herewith  inserted: 

Nor VI N Green,  President  of  the  Company . 

Thomas  T.  Eckert,  Vice-President  and  General  Manager . 

John  Van  Horn,  Vice-President  of  the  Company . 

Edwin  D.  Morgan,  ex-Governor  State  of  New  York  j Capitalist 
and  Merchant . 

Augustus  Schell,  Capitalist  and  Director  New  York  Central 
R.  R . Co. 

George  B.  Roberts,  President  Pennsylvania  R.  R.  Co. 

C.  P.  Huntington,  President  Central  Pacific , and  Chesapeake  and 
Ohio  R.  R.  Cos. 

Sidney  Dillon,  President  Union  Pacific  R.  R.  Co. 

Hugh  J.  Jewett,  President  of  the  Erie  Railway. 

Samuel  Sloan,  President  Delaware  and  Lackawanna  R.  R.  Co. 
Jay  Gould,  Capitalist. 

Russell  Sage,  Capitalist . 

Alonzo  B.  Cornell,  Governor  State  of  New  York. 

Cyrus  W.  Field,  Capitalist  and  Director  Atlantic  Cable  Cos. 
Edwards  S.  Sanford,  Vice-President  Adams  Express  Co. 

James  H.  Banker,  Capitalist. 

Robert  Lenox  Kennedy,  Vice-President  Bank  of  Commerce. 

J.  Pierpont  Morgan,  Messrs.  Drexel , Morgan  Co. 

F.  L.  Ames,  Capitalist , Boston. 

Harrison  Durkee,  Capitalist. 

Edwin  D.  Worcester,  Treasurer  New  York  Central  R.  R.  Co. 

W.  D.  Bishop,  ex-President  New  York , New  Haven , and  Hartford 
R.  R.  Co. 

Zalmon  G.  Simmons,  Capitalist , Kenosha , Wis. 

Amasa  Stone,  Capitalist , Cleveland , Ohio. 

George  J.  Gould,  Capitalist. 

Chauncey  M.  Depew,  Director  New  York  Central  R.  R.  Co. 

J.  W.  Glendinning,  President  Acadia  Coal  Co. 

Erastus  Wiman,  President  Great  North-Western  Telegraph  Co.  of 
Canada. 

The  staff  of  employes  is  an  exceptionally  strong  one,  owing  largely 
to  the  fact  that  the  rapid  growth  which  has  taken  place  in  the  business 


Wide  Dispersion  of  the  Property.  21 


itself  so  rapidly,  within  the  past  generation,  has  developed  in  the  highest 
degree  the  capacity  of  the  men  engaged  in  carrying  it  forward.  Thus, 
nearly  every  individual  on  the  staff  has  had  some  peculiar  training  to  fit 
him  for  the  task  in  hand ; while  a majority  of  them,  engaged  in  the  direct 
administration  of  its  affairs,  have  had  an  enlarged  experience  of  the 
highest  and  most  varied  kind  to  qualify  them  for  the  positions  they 
occupy.  This  is  especially  true  of  Dr.  Norvin  Green,  the  president,  who 
has  spent  a lifetime  in  the  most  complete  devotion  to  the  advancement 
of  telegraph  interests,  and  whose  wisdom  and  experience  are  well  known 
and  appreciated.  Associated  with  the  president  is  General  Eckert, 
the  able  administrator  of  the  details  of  the  business.  General  Eckert 
was  Assistant  Secretary  of  War  during  the  Rebellion,  and  greatly 
distinguished  himself  by  his  ability  and  vigor  in  this  important  posi- 
tion at  the  most  critical  period  in  the  history  of  our  country.  He  is 
most  ably  seconded  by  Colonel  Clowry,  who  is  located  at  Chicago, 
and  whose  district  comprises  fully  one-half  of  the  entire  continent.  A 
corps  of  assistants  and  local  managers,  whose  loyalty  and  confidence  the 
general  manager  has  won  in  a marked  degree,  supplement  him  at  every 
point.  The  company  is  thus  singularly  fortunate  in  possessing  the  best 
administrative  skill  in  every  branch  of  its  business,  whether  among  its 
army  of  operators  or  in  the  financial,  construction,  or  maintenance 
departments.  While,  on  the  one  hand,  it  would  be  impossible  to  oblit- 
erate a staff  and  organization  so  complete  for  the  purpose  in  view,  it 
would  on  the  other  be  equally  impossible  to  duplicate  it,  even  after 
long  years  of  growth  and  experimenting,  and  at  an  expenditure  such  as 
no  sane  body  of  capitalists  would  for  one  instant  contemplate. 

Distribution  of  the  Property. — In  order  to  show  the  extent 
of  the  territory  served  by  the  Western  Union  Telegraph  Company  and 
the  distribution  of  its  property,  the  following  table  is  submitted  as  indi- 
cating the  number  of  miles  of  poles  and  of  wire  in  each  State  and  Ter- 
ritory in  June,  1881.  Since  this  was  compiled,  there  has  been  an  increase 
of  nearly  twenty  per  cent,  in  many  localities.  The  “ phantom  ” wire  given 
in  the  list,  over  109,000  miles,  represents  the  additional  service  possible 
with  the  use  of  the  duplex  and  quadruplex  instruments,  which  has  been 
immensely  increased  during  the  last  year.  It  is  no  exaggerated  state- 
ment to  make  that  the  Western  Union  Telegraph  Company  have  in 
actual  service,  by  the  introduction  of  this  extraordinary  invention,  a 
mileage  of  fully  half  a million  of  miles  of  wire. 

A statement  indicating  the  possessions  of  the  company  in  real 
estate  might  accompany  this  tabulated  showing  of  its  lines,  but  for  want 
of  room.  It  will  suffice  to  say  that  the  Western  Union  possesses  good- 
paying real  property  worth  considerably  over  three  millions.  The  fol- 
lowing will  show  the  distribution  of  its  earning  power: 


22 


A Talk  on  Telegraphic  Topics. 


TABLE 


SHOWING  NUMBER  OF  MILES  OF  POLES  AND  OF  WIRE  IN 
EACH  STATE,  TERRITORY,  ETC.,  JUNE  30,  1 88 1. 


Miles 

Miles 

Mi’es 

Miles 

Miles 

Actual 

Phantom 

Miles 

Actual  Phantom 

States y &c. 

Poles. 

Wire. 

Wire. 

States , &c. 

Poles. 

Wire. 

Wire. 

Alabama 

i,953 

663 

7;858 

1,798 

Montana 

310 

.... 

Arkansas 

1,349 

625 

Nebraska 

3,x55 

x,444 

Arizona 

557 

931 

.... 

Nevada 

. 1,940 

3,763 

i,x43 

British  Columbia. . . 

New  Brunswick.. 

584 

x,953 

1,881 

California 

4,945 

9,506 

1,725 

New  Hampshire. 

90r 

2,097 

282 

Cape  Breton 

300 

810 

236 

New  Jersey 

■ • 1,704 

12,244 

3,763 

Colorado 

1,576 

4,825 

672 

New  Mexico 

..  856 

x,376 

16,609 

Connecticut 

i,454 

8,036 

5,385 

New  York 

• 8,445 

33,04x 

16,609 

Delaware 

3i5 

L550 

574 

North  Carolina. . . 

1,611 

4,3X5 

95x 

Dakota 

Nova  Scotia 

911 

2,306 

1,483 

Dist.  of  Columbia.. 

”48 

424 

247 

Ohio 

, . 7,617 

27,812 

*2,751 

Florida 

240 

367 

Oregon 

.*  836 

1, 5X9 

400 

Georgia 

2,842 

6,989 

1,610 

Pennsylvania 

* 7,x74 

29,x93 

11,509 

584 

Idaho  

207 

207 

Rhode  Island 

266 

x,333 

Illinois 

9,808 

26,600 

19,076 

7,252 

South  Carolina . . . . 

. 1,196 

3,902 

930 

Indiana 

5,430 

7,i35 

Tennessee 

7,204 

1,805 

Iowa 

5,606 

11,119 

1,609 

Texas  

• 1,6x3 

5,109 

435 

Indian  Territory. . .. 

239 

441 

Utah 

i,373 

776 

Kansas 

3,686 

7,086 

1,141 

Vancouver 



Kentucky 

1,600 

767 

4,856 

U937 

Vermont 

2,612 

2,061 

Louisiana 

2,593 

3J5 

Virginia 

8,266 

Maine 

1,170 

3,736 

1,364 

Washington. 

372 

454 

Massachusetts 

2,475 

8,95i 

3,079 

West  Virginia 

1,170 

IX5 

Maryland 

Michigan 

1,483 

3,952 

6,415 

8,888 

3,209 

2,955 

Wisconsin 

Wyoming 

657 

2,868 

396 

1,222 

Minnesota 

149 

2,059 

4,437 

184 

4,464 

9,509 

Canada 

422 

848 

908 

4,537 

Missouri 

Totals 

. 110,000 

327,000 

109,548 

Stability  of  Business. — The  prosperity  of  the  Western  Union 
Telegraph  Company  is  less  affected  than  that  of  any  other  investment 
property  by  adverse  circumstances  which  may  affect  the  country  gen- 
erally. It  is  true  that  in  times  of  the  highest  prosperity  the  telegraph  is 
called  into  frequent  requisition,  but  it  is  equally  true  that  when  panics  and 
disasters  impend  there  is  a still  greater  necessity  for  this  rapid  means  of 
communication.  No  property  in  which  investors  generally  can  purchase 
shares  has  a greater  elasticity  in  its  income  than  this.  Of  necessity  the 
telegraph,  as  the  second  means  of  communication,  adapts  itself  to  the 
wants  of  the  entire  community,  and  what  to  almost  every  other  business 
would  be  disaster  and  loss,  may  be  contributory  of  profit  and  prosperity 
to  the  telegraph  company ; so  that  in  choosing  an  investment  it  would 
be  difficult  to  find  one  so  universal  in  its  extent,  and  at  the  same  time 
based  upon  one  of  the  essentials  of  existence,  in  a country  whose  dis- 
tances are  so  magnificent,  and  to  the  progress  of  which  quick  communi- 
cation is  of  such  vital  importance. 

But  it  is  not  only  in  times  of  prosperity  or  adversity  that  instantaneous 
communication  is  a vital  element,  but  every  day’s  progress  makes  the 
field  larger,  and  the  use  of  the  electric  current  more  general.  Custom, 
habit,  convenience,  luxury,  necessity,  all  combine  to  create  a rapid 


The  Telegraphic  Drag-Net. 


23 


growth  of  this  business.  Thus,  congratulations  upon  a wedding  are 
much  more  frequent  by  telegraph  now  than  they  used  to  be  by 
mail;  sympathy  at  the  death  of  a friend,  rejoicing  at  the  birth  of  an 
heir,  are  all  events  that  contribute  their  quota  to  the  coffers  of  the 
telegraph  company,  equally  with  the  news  of  the  assassination  of  a 
President,  notwithstanding  the  wide  contrast  between  the  import- 
ance of  the  events.  Laziness  contributes  in  no  small  degree  to  the 
revenue;  for  the  man  who  would  shrink  from  writing  three  or  four 
letters  a day,  thinks  nothing  of  dashing  off  a dozen  ten-word  messages; 
in  fact,  is  rather  pleased  than  otherwise  to  be  able  to  accomplish  so  much 
with  such  a trifling  effort.  It  is  difficult  to  name  an  interest,  an  event, 
a vice,  or  a virtue  which  does  not  avail  itself  of  the  electric  fluid  as  a 
means  of  communication.  Ministers  exchange  pulpits  by  telegraph,  and 
are  summoned  to  christenings,  weddings,  and  death-beds  ; appointments 
are  made  with  the  dressmaker,  the  dentist,  the  tailor,  and  the  chiropo- 
dist ; fleets  are  moved ; trains  are  dispatched  ten  thousand  in  a day  ; the 
furthest  ends  of  the  earth  are  reached  and  the  most  stupendous  events 
recorded  through  the  medium  of  this  company’s  operations.  The  first 
thing  that  the  entire  community  does  in  the  morning  is  to  glance  at  the 
news  which  the  telegraph  has  brought,  and  on  which  the  Western  Union 
Company  makes  a handsome  profit.  However  much  the  use  of  the 
telegraph  may  have  permeated  all  ranks,  walks,  and  conditions  of  life  in 
Europe  or  elsewhere,  it  is  ten  times  the  case  in  America,  where  the  spirit 
of  enterprise,  the  eager  race  for  wealth  and  the  growth  of  prosperity, 
make  expenditures  in  this  direction  lavish,  when  compared  with  that  pre- 
vailing in  any  other  portion  of  the  world.  In  all  this  the  Western  Union 
participates  almost  exclusively,  and  its  share-holders  profit  thereby. 

Value  of  the  Property. — It  is  no  uncommon  thing  to  hear  urged 
against  telegraph  property,  as  an  investment,  that  it  is  of  an  exceedingly 
fragile  character  — that  it  is  diffused  over  such  broad  areas  as  to  be 
unavailable  for  realization,  and  that  once  having  been  built  it  would  be 
impossible,  if  the  business  fails  to  grow  up,  to  escape  total  loss.  This 
is  exceedingly  true,  so  far  as  competing  telegraphs  are  concerned;  but  it 
does  not  apply  to  a company  occupying,  to  a very  large  extent,  exclu- 
sively the  territory  covered  by  its  wires,  and  possessing  an  earning  power 
such  as  the  Western  Union  has  demonstrated  by  its  years  of  dividends 
earned  and  paid.  While  it  may  be  true  that  telegraph  plant  is  fragile, 
widely  scattered,  intangible,  and  enough  out  of  sight  to  lack  that 
solidity  which  makes  other  investments  attractive,  it  may  with  equal 
truth  be  urged  that  it  is  not  exposed  to  the  multitude  of  dangers 
besetting  all  other  investments.  Floods  may  sweep  away  miles  of  railway, 
riot  may  cause  tracks  to  be  torn  up,  station-houses,  locomotives,  and 
loaded  cars  to  be  burned ; rows  of  houses  may  be  leveled  by  fire  in  a 
night;  a mortgage  may  be  rendered  valueless  by  the  death  of  the 


24 


A Talk  on  Telegraphic  Topics. 


promiser;  indeed,  it  is  hardly  possible  to  conceive  any  investment  not 
exposed  to  mutations  of  one  kind  or  another.  The  Western  Union 
Company,  owing  to  the  wide  area  over  which  it  is  distributed,  is  less  liable 
to  permanent  injury  than  any  other  property.  Should  a tornado  occur  in 
one  State  in  the  South,  destroying  lines  and  interrupting  communication, 
it  does  not  interfere  with  the  earning  power  of  the  lines  in  other 
States  in  the  North  or  West.  Floods,  fires,  failure  of  the  crops  in  one 
locality,  do  not  affect  the  ability  to  earn  in  another.  The  telegraph  can- 
not be  blown  up  in  a night,  or  affected  seriously  by  any  combination  pos- 
sible, except  such  cataclysms  as  ruin  the  prosperity  of  the  entire  country. 
It  is  the  only  enterprise  that  is  omnipresent  and  universal  in  its  earning 
power,  taxing  every  “ boom,”  whether  in  New  England  or  New  Mexico, 
and  but  slightly  affected,  if  at  all,  by  the  misfortunes  of  either  locality, 
which  are  fatal  to  local  enterprises.  The  worst  damage  possible  in  one 
city  that  can  happen  to  a telegraph  line,  even  its  total  destruction,  can  be 
immediately  repaired  at  slight  cost ; while  circuits  are  so  numerous  that 
hardly  any  combination  of  evils  could  affect  the  current  through  business, 
this  being  carried  on  independently  of  any  local  disturbance.  Therefore, 
though  telegraph  property  may  appear  to  be  fragile,  widely  scattered,  and, 
in  a sense,  unrealizable,  it  possesses  an  elastic  element,  rendering  it  less 
liable  to  serious  damage  of  a permanent  character  than  any  other  kind 
of  plant. 

Efficiency  of  Service. — There  have  been  at  times,  and  notably 
about  a year  ago,  frequent  complaints  as  to  delay  in  transmission  of  mes- 
sages, but  for  months  past  these  have  almost  entirely  ceased  and  the 
service  is  now  performed  to  the  general  satisfaction  of  the  public. 
The  causes  conspiring  at  all  times  to  prevent  full  effectiveness  are 
numerous,  especially  in  the  summer  months,  when  bush-fires  are  common 
in  various  parts  of  the  country ; and  when  great  calamities  occur,  as  in 
the  assassination  of  the  President,  which  taxed  the  carrying  capacity 
of  the  wires  to  the  utmost  to  meet  the  abnormal  demand  for  hourly 
bulletins,  and  by  the  press  for  news.  But  in  ordinary  times,  especially 
with  the  recent  improvements  and  splendid  management  exhibited 
during  the  last  year,  there  is  nothing  which  a Telegraph  Company  can 
accomplish,  in  the  way  of  promptitude  and  effectiveness,  which  it  is  im- 
possible for  the  Western  Union  Company  to  perform.  Dr.  Green,  its 
excellent  President,  some  time  ago  remarked  that  Time  was  the  com- 
petitor most  feared ; and  to  effectually  lessen  the  period  occupied  in  the 
transmission  of  the  business  is  the  constant  effort  of  the  executive  de- 
partment. It  is  no  uncommon  thing  now  to  have  messages  from  New- 
York  and  Boston  to  Chicago,  and  vice  versa,  transmitted,  transactions 
effected,  and  answers  received,  all  within  a space  of  fifteen  to  eighteen 
minutes.  Between  Washington  and  New- York  no  less  than  sixty  wires 
are  in  constant  requisition,  while  between  New- York  and  the  Western 


Efficiency  and  Cheapness. 


25 


cities  the  great  number  of  wires  afforded  by  the  numerous  circuits  offer 
facilities  which  no  other  organization  could  ever  dream  of  supplying. 
Certain  it  is,  if  the  Western  Union  Company  cannot  and  does  not  afford 
efficient  service,  it  is  not  for  want  of  facilities,  or  for  want  of  effort,  skill, 
and  experience  on  the  part  of  its  managers.  That  these  facilities  are 
made  the  most  of  at  the  present  moment  is  demonstrated  in  a very  re- 
markable manner  by  the  single  fact  contained  in  a report  to  the  General 
Manager,  to  the  effect  that,  during  a certain  period  in  the  month  of  May 
just  passed,  messages  to  the  number  of  119,612,  received  in  the  New- 
York  office,  required,  from  the  moment  of  filing  there  to  the  moment 
of  receipt  at  destination,  an  average  time  of  only  eight  minutes  and 
eleven  seconds . A number  of  messages  so  great,  extending  over  a period 
so  long,  would  of  course  imply  that  the  distances  were  of  the  most 
varied  character,  and  this  report  indicates  the  service  performed  as  cer- 
tainly a very  remarkable  one.  It  would  be  most  difficult  to  conceive  any 
commercial  organization  possessing  more  fully  and  completely  all  the 
requisites  for  perfect  service  than  is  possessed  by  this  company. 

Cheapness. — The  rates  which  prevail  over  the  lines  of  the  Western 
Union  Telegraph  Company,  as  compared  with  those  charged  in  European 
countries,  are  the  subject  of  frequent  criticism.  It  is  maintained  by  those 
unfamiliar  with  such  matters,  that  if  the  rates  were  lowered  the  resulting 
business  would  be  larger  and  more  profitable ; and  that  if  the  capital 
had  not  been  so  much  inflated,  the  public  would  be  better  served, 
the  business  more  efficiently  done,  and  the  rates  exacted  much  lower. 
It  is  an  open  question,  after  all,  whether,  in  comparison  with  the  dis- 
tances traversed,  the  rates  now  charged  are  so  much  in  excess  of  those 
prevalent  in  smaller  countries.  Take,  for  instance,  the  distance  between 
New- York  and  Portland,  Oregon,  the  rate  is  One  Dollar  and  Fifty  Cents 
for  ten  words.  To  transmit  a message  an  equal  distance  in  Europe 
would  imply  the  use  of  the  wires  over  a distance  equal  to  that  between 
London  and  Teheran,  Persia,  and  a cost  of  at  least  Ten  Dollars . In 
our  more  thickly  settled  States,  such  as  New- York,  Massachusetts,  and 
Pennsylvania,  the  rates  generally  prevailing  are  twenty-five  to  thirty-five 
cents,  a very  little  in  excess  of  those  existing  in  the  Postal  Systems  of 
equal  distance  in  European  countries. 

Again,  there  are  localities  where  existing  rates  of  the  Western  Union 
are  much  lower  than  in  Great  Britain.  Thus,  while  there  is  no  rate  in  that 
country  below  twenty-five  cents,  the  rate  of  fifteen  cents  between  New- 
York  and  Philadelphia  has  for  years  existed.  The  local  city  rate  in  Lon- 
don is  twenty-five  cents;  while  the  local  rate  in  New- York  and  other 
large  cities  is  fifteen  cents.  The  night  rate  is  an  unknown  thing  in 
Great  Britain,  while  in  the  United  States  it  is  universal  and  largely 
availed  of. 


26 


A Talk  on  Telegraphic  Topics. 


As  will  be  seen  by  the  tables  elsewhere,  the  reduction  in  the  rates 
charged  for  the  transmission  of  messages  has  been  extensive,  and 
although  gradual,  yet  constant;  and  if  in  the  future  they  are  reduced 
with  the  same  rapidity  as  in  the  past,  it  will  not  be  very  long  before  the 
tolls  charged  will  bear  about  the  same  relative  proportion  of  cheapness 
as  do  other  public  charges  in  this  country  to  similar  charges  in  Europe, 
as,  for  instance,  in  the  transportation  of  passengers  or  carriage  of  freight, 
etc.  There  is  a point  below  which  the  business  of  telegraphy  cannot  be 
done  at  a profit.  The  human  element  is  so  essential  a portion  of  the 
mechanism,  and  the  skilled  labor  involved  demands  so  high  a rate  of 
compensation,  that  so  long  as  it  is  necessary  to  have  operators  to  trans- 
mit and  receive  dispatches,  and  messengers  to  deliver  them,  the  rate  of 
charges  cannot  be  lowered  to  any  very  great  extent  with  any  prospect  cf 
profit  or  efficiency.  Besides  this,  the  business  has  grown  in  a greater 
proportion  than  that  of  any  other  business,  notwithstanding  the  fact 
that  the  rates  charged  are  criticised  as  being  high.  The  business 
of  the  Western  Union  Telegraph  Company  is  apparently  on  a perfectly 
safe  and  permanent  footing,  formed  upon  the  traffic  it  is  capable  of  carry- 
ing constantly,  punctually,  and  well,  at  the  lowest  rates  consistent  with 
these  demands. 

In  reference  to  cheap  telegraph  rates  in  England,  where  the  system 
is  conducted  by  the  Government,  similar  to  the  post-office  department, 
the  Electrician , which  is  a London  journal  of  high  authority,  says: 

“ That  we  should  be  allowed  to  send  cartloads  of  messages  slowly  and  un- 
certainly at  sixpence  may  be  well,  though  we  are  by  no  means  satisfied  about  it ; 
but  it  would  be  better  still  if  we  first  made  sure  of  sending  them  at  all  times,  in 
all  weathers,  and  at  all  speed.  This  is  what  a telegraph  is  good  for,  if  it  is  good 
for  anything.  The  price  is  not  of  first  consequence ; rapidity  and  certainty  are. 
Telegrams  of  the  post-card  type  were  best  consigned  to  the  halfpenny  post. 
That  kind  of  traffic  is  like  hooking  your  freight  train  on  to  the  passenger  train 
— it  delays  everybody  and  benefits  nobody.  There  is,  of  course,  an  advantage 
in  having  a very  low  tariff,  the  advantage,  namely,  of  paying,  say,  sixpence  for 
what  now  costs  a shilling ; but  this  is  all.  The  talk  about  extending  the  bless- 
ings of  cheap  telegraphy  to  the  multitude  is  mere  claptrap,  and  certain  we  are 
that  cheap  telegraphy  for  the  multitude  who  seldom  really  need  it,  will  be  the 
reverse  of  a blessing  to  the  people  who  put  it  to  its  legitimate  uses,  so  long  as 
our  telegraph  system  remains  what  it  is.” 

Comparisons. — In  selecting,  from  the  long  list  of  securities  dealt  in 
at  the  New- York  Stock  Exchange,  a number  of  railroad  stocks  command- 
ing the  highest  prices  in  the  open  market,  it  will  be  interesting  to  com- 
pare their  salient  points  with  those  of  the  Western  Union  Company. 
Take,  for  instance,  the  stock  of  the  Chicago  and  North-Western  Rail- 
road Company,  which  is  quoted  in  the  vicinity  of  one  hundred  and  thirty, 
while  Western  Union  is  quoted  at  the  present  writing  at  eighty-five,  a 
difference  of  forty-five  per  cent.  On  examination  we  find  that  the 


The  Credulity  of  Unbelief. 


27 


total  issue,  stock  and  bonds,  of  the  North-Western  Railroad  Company, 
is  eighty-seven  millions,  while  that  of  the  Western  Union  Company  is 
eighty-six  millions  of  dollars.  The  gross  revenue  of  the  railroad  is 
seventeen  millions  as  against  sixteen  millions  for  the  telegraph  company ; 
the  gross  expenditures  are  in  both  cases  about  ten  millions.  But  the 
fixed  interest  charge  which  the  railroad  has  to  pay  is  about  $3,800,000, 
while  the  fixed  charges  of  the  Western  Union  Company  are  less  than 
$500,000.  Consequently,  the  amount  to  be  divided  among  the  share- 
holders by  the  railroad  company  is  only  about  two  and  a half  millions, 
while  the  stockholders  of  the  telegraph  company  may  get  over  five 
millions.  An  investment  in  the  Western  Union  Company  at  the  present 
time  pays  seven  and  a half  per  cent.,  while  an  investment  in  the  Chicago 
and  North-Western  Company,  at  130,  pays  less  than  five  per  cent.  To 
illustrate:  A purchase  of  one  hundred  shares  Chicago  and  North-West- 
ern would  cost  $13,000,  and,  as  an  investment,  would  yield,  say,  $700  per 
annum.  The  same  revenue  could  be  relied  upon  from  the  Western 
Union  Company  by  the  purchase  of  one  hundred  and  sixteen  shares, 
costing  $9,512  ; or  a less  amount  of  capital  invested  by  $3,488  with  the 
same  revenue  produced.  Whether  the  Western  Union  stock  is  not  just 
as  safe  an  investment,  diffused  as  it  is  all  over  the  country  and  based 
upon  a want  just  as  urgent  as  that  of  transportation,  with  a service  just 
as  efficient,  as  compared  with  a railway  subject  to  local  contingencies 
and  confined  to  but  one  region,  the  reader  must  determine. 

Amplifying  the  comparison  of  corporations  possessing  capital  and 
issues  similar  in  amount  to  the  capital  of  the  Western  Union  Company, 
it  is  a fact  that  the  gross  revenue  of  but  few  of  them  exceed  that  of  the 
Telegraph  Company,  while,  as  a rule,  the  fixed  charges  for  interest  are 
so  great  as  to  diminish  materially  the  chances  for  profit  to  the  common 
stockholders.  These  fixed  charges  must  under  all  circumstances  be 
paid,  no  matter  how  much  the  shareholders  may  suffer  by  deprivation 
of  dividends,  to  save  their  property  from  the  perils  of  foreclosure.  To 
what  extent  the  stock  of  railroads  has  been  obliterated  in  the  last  decade, 
and  how  dangerous  is  a heavy  liability  in  the  shape  of  bonds  and  mort- 
gages and  floating  indebtedness,  it  is  needless  to  recount.  The  motto 
of  the  Rothschilds,  u Never  to  trust  a man  who  owes  much,”  may  be 
extended  to  the  securities  of  some  corporations.  In  this  respect  the 
Western  Union  Company  has  a position  almost  unique  in  its  freedom 
from  indebtedness,  in  view  of  the  vast  extent  of  its  business,  its  area  of 
territory,  and  its  large  earning  power. 

The  only  other  kind  of  stock  comprehending  in  its  operations  almost 
the  entire  country  is  that  of  express  companies,  and  a comparison 
between  the  rates  prevalent  for  these  stocks  and  that  at  which  Western 
Union  is  selling  implies  a want  of  appreciation  which  is  very  remarkable. 
Thus,  the  Adams  Express  Company’s  stock  is  quoted  at  135  to  138  and 


28 


A Talk  on  Telegraphic  Topics. 


Western  Union  at  85,  a difference  of  fifty  to  fifty-three  per  cent.,  though 
what  there  is  tangible  to  make  up  the  twelve  millions  of  stock  of  the 
Adams  Express  Company  is  much  more  difficult  to  designate  than  the 
property,  of  the  Western  Union  Company.  The  Express  Company’s 
main  assets  are  horses,  wagons,  and  office  furniture,  if  an  inventory  of  a 
realizable  character  were  to  be  insisted  upon.  But  its  ability  to  earn  and 
the  contracts  which  it  possesses  are  no  doubt  the  attractions  which  make 
the  stock  so  safe,  and  sufficiently  desirable  to  have  it  quoted  at  138. 
Why  the  Western  Union  should  not  be  as  well  quoted,  in  view  of  the 
enormous  number  of  its  contracts  of  equal  permanence  and  value,  and 
based  on  a want  just  as  imperative  as  express  transportation,  is  a puzzle, 
the  existence  of  which  is  only  attributable  to  the  “credulity  of  unbelief!  ” 

Contracts. — Franchises  of  a value  almost  incalculable  are  pos- 
sessed by  the  Western  Union  Company.  Especially  is  this  the  case  in 
the  contracts  which  it  has  with  Railroad  Companies,  amounting,  it  is 
said,  to  the  number  of  nearly  Eight  Hundred.  In  almost  all  cases,  these 
contracts  are  exclusive  in  their  character,  and  where  this  is  not  the  case, 
the  arrangement  is  made  so  advantageous  to  the  Railroad  Company  as  to 
leave  no  room  for  a disposition  on  its  part  toward  a change.  The 
maintenance  of  the  Telegraph  lines  by  the  Railroad  Company  is  a con- 
dition almost  universal,  while  a free  use  of  station-houses,  light,  fuel, 
and  frequently  a division  of  the  salaries  of  the  operators,  give  to  the  Tele- 
graph Company,  not  only  business  exclusive  in  its  character,  but  at  a cost 
merely  nominal.  The  surveillance  of  the  lines  by  the  frequency  of  ob- 
servation permitted  by  the  passing  trains,  and  the  necessity  for  their 
proper  maintenance,  in  order  that  the  business  of  the  railroad  may  be 
done  without  disaster,  insures  the  lines  being  kept  in  the  highest  pos- 
sible state  of  efficiency.  Aside  from  the  economy  of  this  arrangement, 
the  mutual  advantages  which  spring  from  it  in  the  transportation  of 
freight,  employes,  &c.,  and  the  profit  that  results  from  the  business  ac- 
quired through  the  additional  occupation  of  vast  stretches  of  territory, 
completely  shut  out  the  possibility  of  any  successful  competition.  The 
facility  which  the  railroad  contracts  afford  for  the  occupation  of  territory 
which  would  not  otherwise  yield  any  profit  is  obvious.  Hence,  numerous 
separate  points  which  would  not  otherwise  be  reached  because  of  their 
remoteness,  are  made  in  the  aggregate  to  contribute  materially  to 
the  receipts,  while  only  in  a very  slight  degree  adding  to  the  expenses. 
Compared  with  the  condition  of  competing  lines,  erected  along  country 
roads,  difficult  to  watch  and  expensive  to  repair,  the  possession  of  rail- 
way facilities  for  telegraph  property  must  be  of  inestimable  value. 
Placing  on  these  contracts  (which  it  would  be  impossible  to  duplicate) 
the  low-estimated  value  of  $25,000  each,  their  combined  worth  would 
be  twenty  millions,  or  one-quarter  the  entire  capital  of  the  company. 


Contracts  worth  Twenty  Millions.  29 


To  show  that  the  above  estimate  is  not  a high  one,  it  may  be  said 
that  the  contract  of  a great  trunk-line  running  out  of  New  York  was 
secured  temporarily  some  time  ago  by  an  opposition  Telegraph  Com- 
pany for  $100,000  a year,  or  equal  to  a capitalization  of  $1,600,000  for 
a single  contract.  This  contract,  however,  was  subsequently  relinquished, 
and,  under  an  arrangement,  the  same  is  now  in  alliance  with  the  West- 
ern Union  Company. 

Among  other  valuable  advantages  not  included  under  the  head  of 
railroad  contracts,  is  the  right  of  way  acquired  and  possessed  all  over  the 
country,  but  particularly  the  franchise  of  entrance  into  the  various  large 
cities.  This  permission  is  yearly  becoming  of  greater  value,  especially 
in  view  of  the  agitation  afoot  for  placing  the  wires  underground,  owing 
to  the  multiplication  of  poles  used  by  the  numerous  Telephone  and  Elec- 
tric Lighting  Companies  and  Private  Lines.  The  question  of  wires  and 
poles  in  the  streets  is  now  of  such  vital  interest  that  the  franchises  of  this 
nature  possessed  by  the  Western  Union  Company  are  of  great  and  in- 
creasing value.  The  problem  of  burying  the  wires  is  one  they  no  doubt 
will  be  prepared  to  meet  as  soon  as  its  practicability  is  demonstrated. 
Once  accomplished,  it  will  be,  by  its  expensiveness,  the  most  effectual 
barrier  possible  to  all  future  competition  ; and,  what  is  more,  the  public 
can  be  made  to  pay  for  it  by  a slight  advance  on  existing  rates. 

In  addition  to  the  contracts  heretofore  existing,  a new  and  most  re- 
munerative class  of  these  permanent  arrangements  has  sprung  up  in  the 
rental  of  private  wires  to  brokers,  bankers,  and  others,  and  between 
manufacturing  establishments,  commission  houses,  sales-rooms,  etc. 
These  contracts  are  not  only  between  such  cities  as  New- York  and 
Chicago,  Boston,  Philadelphia,  and  Washington,  but  between  other 
similar  contiguous  localities,  as  Syracuse  and  Watertown,  and  besides 
connections  for  the  season,  at  high  rates,  between  New-York  and  Sara- 
toga, Newport,  Long  Branch,  etc.  The  rates  obtained  for  the  use  of  these 
special  wires  yield  a very  large  advance  upon  cost,  and  make  secure  a 
business  which  it  is  impossible  to  get  away  from  the  Western  Union 
Telegraph  Company.  Of  course,  it  is  always  understood  that  a sufficient 
advance  to  cover  the  cost  of  maintenance  is  obtained,  in  addition  to  any 
possibility  of  profit  on  such  business  as  would  probably  otherwise  be  sent 
over  the  lines.  The  volume  of  revenue  from  this  class  of  contracts  alone 
is  very  great,  and  increasing  year  by  year  to  such  an  extent  as  to  make 
it  a very  prominent  feature,  and,  obviously,  it  is  a very  permanent  one, 
which  no  competing  line  can  interfere  with. 

CONCLUSION. — For  the  information  of  those  who  desire  it,  I have  thus 
given  a very  general  view  of  the  prominent  features  of  the  business  of  the 


30 


A Talk  on  Telegraphic  Topics. 


Western  Union  Telegraph  Company.  There  are  certain  points  I have  not 
touched  upon,  which  must  be  the  subject  of  wider  treatment.  In  order 
to  judge  of  the  future  of  the  property,  it  is  necessary  to  look  at  its  His- 
torical aspects,  which  will  be  treated  specially  and  distinctively.  Inas- 
much as  the  chief  danger  to  be  feared  for  the  property  is  that  resulting 
from  Competition,  that  subject  requires  more  comprehensive  treatment 
than  can  be  readily  afforded  it  in  this  space.  Hence,  after  due  inquiry, 
some  remarks  have  been  specially  prepared  upon  both  these  subjects  to 
accompany  this  report.  These  all  may  be  found  in  the  following  pages. 


THE  RISE  OF  THE  WESTERN  UNION. 


O those  familiar  with  the  rise  and  progress  of  the  Western  Union 


1 Telegraph  system,  the  implied  limitations  of  the  first  word  of  the 
title  must  be  amplified  by  the  full  significance  of  the  word  “Union.” 
To  all  intents  and  purposes,  this  organization  is  a “ Union  of  Com- 
panies and  Interests  ” far  more  numerous  and  important  than,  in 
any  other  known  instance,  is  included  within  the  circumscribed  limits 
of  even  the  ordinarily  elastic  term  “Company.”  It  is,  in  fact,  a 
“Zollverein”  of  telegraph  interests,  with  results  readily  comparing,  in 
importance  and  magnitude  of  income,  with  some  of  the  Commercial 
Unions  bearing  that  name,  which  exist  between  the  nations  of  Europe. 

If  it  were  possible  to  accomplish  a “Union  of  all  Railroads” 
of  the  country,  and  put  the  same  under  one  management,  the  results 
would  not  perfect  a system  of  uniform  and  economical  transportation  of 
passengers  and  freight  so  perfectly,  as  is  accomplished  in  the  matter  of 
uniform  and  effective  communication  by  the  Western  Union.  Indeed, 
with  some  trifling  exceptions,  the  entire  system  of  railroad  telegraphs  is 
already  included  in  the  comprehensive  union  of  this  great  Telegraph 
Company.  The  stock  of  a corporation  or  a “Union”  owning,  con- 
trolling, and  operating  successfully  all  the  railroads,  without  much 
possibility  of  successful  competition,  and  without  limitation  as  to 
charges,  except  such  as  good  policy  would  imply,  would  be  very 
valuable  stock.  Yet  it  may  be  questioned  whether  the  need  of  trans- 
portation is  any  greater  than  the  need  of  instantaneous  communication, 
for  the  one  is  founded  on  just  as  imperative  a want  of  human  nature  as 
is  the  other.  Hence  the  shares  in  an  organization  which  effectually  and 
successfully  compasses  almost  the  entire  control  of  this  means  of  com- 
munication, in  this  progressive  country,  must  necessarily  be  of  increasing 
value.  The  relative  size  of  the  capital  employed  in  all  the  railroads,  if 
combined  into  one  corporation,  would  be  so  vast,  that  when  such  a 
comparison  is  made  with  what  has  actually  been  accomplished  already 
in  combining  almost  all  the  telegraphs,  it  makes  even  the  expanded 
capital  of  Eighty  millions  of  the  Western  Union  sink  into  insignificance. 
It  is  true  that  slender  lines  of  wire,  strung  along  poles,  over  vast  areas 
of  country,  with  instruments  and  batteries  placed  in  adventitious 


32 


A Talk  on  Telegraphic  Topics. 


localities,  offer  but  a meagre  comparison  with  steel  rails,  expensive 
stations,  and  costly  locomotives  and  cars.  But  it  is  equally  true  that 
the  object  sought  by  erection  of  the  fragile  lines  of  telegraph  is  just  as 
effectually  accomplished,  as  the  object  for  which  the  costly  railroad 
structure  is  undertaken.  So  that,  while  the  needs  of  communication 
are  just  as  great  as  the  needs  of  transportation,  there  is  a larger  profit 
possible  for  the  first,  because  the  capital  is  small  in  proportion  to  the 
result  achieved,  and  because,  being  under  one  control,  it  can  be 
managed  with  effectiveness,  economy,  and  without  serious  competition. 
If  there  is  wisdom,  then,  in  investing  largely  in  railway  properties 
widely  scattered,  costly,  and  managed  by  an  infinite  variety  of  capacity, 
and  exposed  to  all  varieties  of  adverse  local  exigencies,  surely  there  is 
equal  wisdom  in  possessing  some  of  the  shares  of  the  property  of  the 
sister  interest,  the  Telegraph  Company.  Presenting  its  facilities  at  all 
points  throughout  the  country,  it  taps  the  purse  of  the  public  at  a greater 
number  of  places,  and  with  more  frequency,  than  that  of  any  other 
known  organization,  except  that  of  the  Government  itself.  No  concern 
so  much  resembles  the  Government  in  its  comprehensiveness  and  the 
completeness  of  its  service,  and,  with  the  single  exception  of  the  Postal 
Department,  it  might  be  claimed  that,  judged  by  the  hourly  require- 
ments of  business  men,  the  general  government  of  the  country  could  be 
much  more  readily  dispensed  with  by  them  than  could  the  Western 
Union. 

With  this  comprehensive  claim  before  us,  it  is  well  to  keep  in  mind 
that  the  Western  Union  is  really  more  a Union  than  a Company.  To 
show  the  record  of  how  it  came  to  exist,  and  of  what  elements  it  is  com- 
posed, some  of  the  main  facts  regarding  its  rise  and  progress  condensed, 
from  an  article  appearing  in  the  public  print,  in  January,  1 88 1,  are 
here  given: 

In  the  first  place  the  Western  Union  Telegraph  Company  now  includes  more 
than  eighty  different  corporations,  the  charters  and  franchises  of  which  it  owns 
and  uses.  The  territory  now  covered  by  the  lines  of  the  company  includes  al- 
most the  entire  inhabited  portion  of  the  Continent  of  North  America.  On  the 
eastern  coast  the  lines  extend  from  North  Sydney,  Cape  Breton,  on  the  Gulf  of 
St.  Lawrence,  to  Brownsville,  on  the  Rio  Grande,  and  on  the  Western  coast  from 
below  Los  Angeles,  Cal.,  to  British  Columbia.  They  reach  across  the  continent 
from  the  Atlantic  to  the  Pacific  Ocean,  along  the  entire  length  of  the  Union  Pacific 
Railroad,  the  Central  Pacific,  from  Sacramento  to  Elko.  They  reach  every  State 
and  Territory  in  the  Union,  and  by  connection  with  allied  companies  supply 
Canada,  Nova  Scotia,  and  New  Brunswick.  The  lines  also  have  an  exclusive 
connection  with  those  in  Newfoundland,  on  the  one  hand,  and  Mexico  and  Cuba 
on  the  other,  and  with  the  Anglo-American  Direct,  French  and  American  Cables, 
make  all  Europe  tributary.  By  the  consolidations  which  have  resulted  in  the 
Western  Union  system,  the  means  of  communication  have  been  greatly  increased, 
while  between  all  the  large  cities  and  many  of  the  less  important  towns  a system 
of  direct  circuits  has  been  established  which  affords  facilities  for  rapid  and  certain 
communication  at  all  times.  Instead  of  several  repetitions  of  messages  between 


A Historical  Retrospect. 


33 


the  commercial  centers  of  the  country,  as  formerly,  transmission  is  now  in  most 
cases  direct  and  instantaneous  ; and  the  operation  of  this  system  over  the  territory 
covered  by  the  lines  is  fast  assuming  the  certainty  and  uniformity  of  mechanism. 
The  company  claim  that  not  only  has  the  public  gained  in  time  and  in  greatly 
increased  facilities  by  these  consolidations,  but  has  received  also  the  benefit  of 
large  reductions  in  the  rates  of  both  public  and  private  dispatches. 

The  history  of  the  “ Union  of  Companies  ” is  thus  briefly  told  by  M. 
Guernsey,  an  attorney-at-law,  whose  familiarity  with  the  subject  is  well 
known  : 

In  April,  1851,  the  New  York  and  Mississippi  Valley  Printing  Telegraph 
Company  was  organized  under  the  general  laws  of  1848  in  New  York  State. 
It  was  to  continue  in  existence  100  years,  and  its  authorized  capital  was 
$360,000.  One-half  of  the  capital  stock  was  to  be  issued  to  Royal  E.  House 
for  the  exclusive  right  of  constructing  and  using  his  patent  printing  telegraph, 
and  the  other  half  was  to  be  used  to  construct,  complete,  and  put  in  operation 
the  line  which  Isaac  Butts  and  Sanford  J.  Smith  had  already  begun  to  put  up 
from  Buffalo,  N.  Y.,  to  St.  Louis,  Mo.  The  company  was  authorized  to  con- 
struct a line  from  Buffalo  to  St.  Louis  via  Cleveland,  Columbus,  and  Cincinnati. 
Under  this  organization  the  line  was  completed  to  Louisville,  Ky.,  a distance  of 
600  miles.  On  January  20,  1854,  by  a resolution  of  the  Board  of  Directors,  the 
capital  stock  of  the  company  was  fixed  at  $170,000,  divided  into  shares  of  $100 
each.  The  number  of  shareholders  had  increased  to  twenty-nine.  A new  certi- 
ficate of  incorporation  was  filed  under  the  Laws  of  New  York  of  'June  29,  1853, 
chapter  471.  On  March  30, 1854,  the  Company  bought  of  the  Lake  Erie  Telegraph 
Company  lines  running  from  Buffalo  to  Detroit  and  from  Cleveland  to  Pittsburgh, 
about  600  miles  in  length.  On  November  1,  1855,  the  stock  of  the  New  York 
and  Mississippi  Valley  Printing  Telegraph  Company  was  consolidated  with 
that  of  the  Erie  and  Michigan  Telegraph  Company,  which  owned  a line  from 
Buffalo  to  Milwaukee,  via  Cleveland,  Detroit,  and  Chicago.  The  line  was  900 
miles  long  and  had  about  one  thousand  three  hundred  miles  of  wire.  The  capi- 
tal stock  of  this  latter  company  was  $170,000,  and  the  amount  paid  in  was  $145,- 
400.  On  April  4,  1856,  the  name  of  the  New  York  and  Mississippi  Valley 
Printing  Telegraph  Company  was  changed  by  a special  act  of  the  New  York 
Legislature,  chap.  97,  to  “ The  Western  Union  Telegraph  Company.” 

The  authorized  capital  of  the  company  then  was  $500,000,  of  which  only 
about  three-fourths  had  been  issued.  On  August  19,  1858,  the  first  scrip  divi- 
dend was  declared,  being  33  per  cent,  on  $369,700,  the  amount  of  outstanding 
stock.  On  September  22  of  the  same  year,  after  the  amount  of  the  authorized 
capital  had  been  increased,  a scrip  dividend  of  414  40-100  per  cent,  on  the 
capital  stock  of  $485,700  was  issued.  Three  more  scrip  dividends  were  issued 
previous  to  the  purchase  of  other  lines  by  issuing  stock.  They  were  as  follows : 
July  16,  1862,  27  26-100  per  cent,  on  the  capital  stock  outstanding  of  $2,355,000; 
March  16,  1863,  100  per  cent,  on  the  capital  stock  outstanding  of  $2,979,300, 
and  December  23,  1863,  33 per  cent,  on  the  capital  of  $5,962,600,  increasing 
the  capital  stock  to  $7,950,700.  About  January,  1864,  an  arrangement  was 
made  for  the  purchase  of  the  Pacific  Telegraph  Company,  a corporation  char- 
tered in  the  State  of  Nebraska  and  authorized  to  buy,  build,  and  operate  a 
telegraph  line  from  some  point  within  a Territory  or  State  east  of  the  Rocky 
Mountains  to  San  Francisco.  Its  capital  was  $1,000,000.  The  purchase  was 
effected  by  an  exchange  of  the  Western  Union  stock  issued  for  that  purpose  for 
the  stock  of  the  Pacific  Telegraph  Company,  the  amount  being  $1,277,210. 

Up  to  this  time  the  lines  owned  by  the  Western  Union  were  all  west  of 
Buffalo  and  the  chief  executive  officers  were  at  Rochester,  N.  Y.  The  next 
purchase  was  that  of  the  lines  of  the  New  York,  Albany,  and  Buffalo  Company, 

3 


34 


A Talk  on  Telegraphic  Topics. 


by  an  exchange  of  stock  amounting  to  $600,000,  and  the  purchase  of  the  New 
York  and  Washington  Printing  Telegraph  Company  in  a like  manner  for 
$146,500  followed.  The  stock  needed  for  this  purpose  was  all  issued  between 
January  1,  1864,  and  May  16,  1864.  The  executive  office  remained  in  Roch- 
ester until  July  I,  1866,  when  it  was  removed  to  New  York  City. 

On  May  11,  1864,  a stock  dividend  of  100  per  cent,  per  share  was  made, 
which  increased  the  capital  to  $20,133,800.  The  increase  of  stock  from  that 
time  to  July  1,  1869,  was  as  follows : 


For  Atlantic  and  Ohio  Telegraph  stock $833,400 

For  Erie  and  Michigan  Telegraph  stock 68,000 

For  House  Telegraph  stock 5,700 

For  Pemberton  & Golden,  Trustees,  &c 3,800 

For  cash 77,000 

For  Western  Union  bonds 91,500 

For  Ithaca  Telegraph  stock 14,500 

For  California  State  Telegraph  stock 164,700 

For  Syracuse  and  Binghamton  Telegraph  stock 4,900 

For  Missouri  and  Kansas  Telegraph  stock.  ...  80,400 

For  United  States  Telegraph  stock 3,885,200 

For  United  States  Pacific  Telegraph  stocks 3>333>3°° 

For  equalization  of  stock  as  per  consolidation  agreement  468,000 

For  fractions 55,ioo 

For  Trumansburg  and  Seneca  Falls  stock 3,500 

For  Hicks  and  Wright  Repeater 1,500 

For  Lodi  Telegraph  stock 500 

For  American  Telegraph  stock 11,833.100 

For  Pittsburg,  Cincinnati,  and  Louisville  stock 4,100 


This  made  the  total  capital  stock $41,063,100 


In  January,  1870,  the  capital  was  $41,070,610,  and  in  January,  1873,  $41,073,- 
410.  It  remained  at  that  figure  until  the  early  part  of  last  year,  1881,  when  the 
capital  was  increased  to  $80,000,000  by  the  issue  of  $8,400,000  for  the  purchase 
of  the  property  of  the  Atlantic  and  Pacific  Telegraph  Company ; of  $15,000,000 
for  the  property  and  valuable  franchises  of  the  American  Union,  and  $15,585,445 
as  a scrip  dividend  to  represent  the  increased  value  of  the  property  by  exten- 
sions and  settlements  by  the  Western  Union  shareholders. 

No  other  telegraph  companies  than  those  above  mentioned  have  been 
directly  purchased  by  the  Western  Union  Telegraph  Company  by  the  issuance 
of  stock,  but  many  of  those  named  had  previously  consolidated  with  other  com- 
panies. This  is  especially  true  of  the  American  Telegraph  Company,  which  was 
chartered  by  the  State  of  New  Jersey,  and  was  organized  in  1859  by  a consolida- 
tion of  the  following  associations  : The  American  Telegraph  Company  of  New- 
York,  the  New -York  and  Y/ashington  Printing  Telegraph  Company,  the 
Magnetic  Telegraph  Company  of  New  Jersey,  and  the  New- York  and  New 
England  Union  Telegraph  Company.  It  also  acquired  possession  of  the 
Maine,  New  Brunswick,  Nova  Scotia,  Troy,  and  Canada  Junction,  Long  Island, 
St.  John  and  Frederickton,  and  Richmond,  Charlotteville,  and  Staunton  lines, 
and  subsequently  of  those  of  the  Cape  Cod,  Cape  Cod  Marine,  Vermont  and 
Boston,  Lynchburg  and  Abington,  East  Tennessee,  Delaware  and  Hudson, 
Philadelphia  and  Wilkesbarre,  Susquehanna,  Baltimore,  and  Ohio,  Washington 
and  New  Orleans,  and  Southwestern  Telegraph  Companies.  The  American 
Company,  in  short,  had  followed  in  the  eastern  and  southern  sections  of  the 
country  a course  similar  to  that  pursued  by  the  Western  Union  Company  in  the 
west,  and  by  purchase,  consolidation,  and  construction,  controlled  lines  extend- 
ing along  the  Atlantic  coast,  and  through  the  Mississippi  and  Ohio  valleys. 


35 


Uniformly  Steady  Growth. 


In  the  purchase  and  consolidation  of  the  telegraph  companies  the  stock 
issued  by  the  Western  Union  was  exchanged  at  various  rates.  The  American 
Telegraph  Company  received  three  of  the  Western  Union  shares  for  one  of  its 
own  shares,  and  in  the  exchange  for  the  United  States  Telegraph  Company 
stock  two  shares  of  Western  Union  were  given  for  three  of  the  United  States 
Telegraph  stock.  For  the  United  States  Pacific  Telegraph  Company  two  shares 
of  Western  Union  were  given  for  three  of  the  United  States  Pacific  stock.  The 
consolidation  was  regarded  as  complete  on  July  1st,  1866,  when  the  principal 
companies  were  united.  Other  companies  have  since  been  purchased  and 
leased,  but  have  been  paid  for  in  cash  or  dividends. 

The  Company  has  also  more  than  eight  hundred  contracts  with  railroad 
companies  for  the  use  of  the  lines. 

Among  the  many  valuable  patents  which  the  company  owns  exclusively  may 
be  mentioned  the  Page  patent  for  the  set  screw  and  retracted  spring,  which  is 
regarded  as  the  most  valuable  and  useful  mechanism  in  telegraphy ; Phelps  & 
Fanner’s  printing  telegraph,  Steam’s  duplex  instrument  for  sending  two  mes- 
sages at  the  same  time  over  one  wire,  and  Edison’s  quadruplex  instrument  for 
sending  four  messages  over  one  wire — two  messages  each  way  — at  the  same 
time.  The  Company  also  has  a license  to  use  the  Colgate  gutta-percha  patent 
for  insulators  for  cables  and  wires. 


The  foregoing,  synopsised  in  tabulated  form  as  follows,  shows  at  a 
glance  the  growth  in  capital  of  the  Western  Union  Telegraph  Company, 
with  the  yearly  increase  of  Receipts  and  Profits  for  as  many  years  back 
as  the  figures  are  just  now  available. 


Capital. 

1856  .... 

$500,000 

7,963,000 

1863  .... 

1864  

20,133,000 

41,063,100 

1869  

1870  

1871  

1872  

1873  .... 

1874  .... 

1875  .... 

1876  

1877  .... 

1878  

1879  ---- 

1880  .... 

41,073,410 

1881  .... 

80,000,000 

1882  

80,000,000 

Receipts. 

Profits. 

$7,3i6,o°°  . 

. . $2,748,000 

7,138,000  . 

2,227,000 

7,637,000  . 

2,532,000 

8,457,000  . 

2,790,000 

9.333.°°°  - 

..  2,757,000 

9,262,000 

2,506,000 

9,564,000  . 

..  3,229,000 

10,034,000 

- - 3.399.000 

9,812,000 

3,140,000 

9,801,000 

--  3.55 1 j°o° 

10,960,000 

4,800,000 

12,782,000 

5,883,000 

14,293,000 

5,908,000 

16,000,000 

6,500,000 

Judged  by  its  ability  to  earn,  it  does  not  seem  as  if  the  increase  of 
capital  was  greater  than  the  business  justified,  especially  as  the  results 
for  the  current  year  will  show.  It  is  clear  that  a continuous  investment 
in  the  stock  of  this  company  has  resulted  in  larger  returns  than  in 
almost  any  other  property  in  the  country.  If  this  is  so  in  the  past,  why 
it  should  not  be  in  the  future  it  is  difficult  to  say. 


* Last  quarter  estimated. 


THE  POSSIBILITIES  OF  COMPETITION, 


WITH  a business  so  vast  in  volume,  so  extended  in  area,  based 
upon  the  supply  of  a want  so  universal,  and  yielding  a return  so 
large,  it  is  no  wonder  that  competition  in  telegraphy  is  feared.  The 
first  cost  of  the  property  being  small,  the  right  of  way  except  along 
the  railway  systems,  easily  secured,  and  there  being  but  few  impedi- 
ments to  the  construction  and  working  of  lines  rapidly  built,  it  would 
seem  at  first  glance  to  make  the  possibility  of  numerous  competitors 
for  the  telegraph  business  more  certain  than  in  almost  any  other  class 
of  enterprise.  But  what  appears  to  be  the  greatest  weakness  of  the 
Western  Union  Company  in  this  respect,  is  in  reality  its  greatest 
strength.  For  while  it  is  true  that  almost  every  enterprise  can  be 
duplicated,  and  competition  is  as  certain  as  the  sun,  it  is  a singular 
fact  that  in  telegraphy  it  has  never  been  permanently  successful.  The 
numerous  undertakings  for  the  establishment  of  competitive  telegraph 
lines  having  been  uniformly  failures,  and  it  yet  remains  to  be  demon- 
strated that  any  company  having  for  its  object  a division  of  the 
business  at  a profit  can  succeed.  In  the  nature  of  things  this  is  impos- 
sible, though  at  the  first  glance  it  seems  easy.  Two  postal  departments 
could  not  succeed,  and  to  establish  two  post-offices  in  12,000  out  of 
the  14,000  localities  where  the  Western  Union  is  planted,  would  be  a 
most  disastrous  speculation  for  any  competitor  of  the  Government. 
On  the  same  principle  two  telegraph  offices  in  12,000  out  of  14,000 
towns  would  result  in  inevitable  loss  and  disaster.  The  amount  of  money 
realized  in  proportion  to  the  cost  of  doing  the  business  may  be  a large 
sum  in  the  aggregate  for  one  company;  but,  divided,  the  profit  is  so  small 
in  the  great  majority  of  towns  that  it  means  loss  to  both.  The  company 
which  has  possession  of  the  business,  the  facilities  for  doing  it,  and  all 
the  connections  which  necessity,  experience,  and  adaptability  have  called 
forth,  is  the  one  most  likely  to  succeed;  while  a new-comer,  having  to 
reduce  rates  to  create  a trade,  lacking  the  knowledge  essential  to  its 
promotion,  and  having  everything  to  learn,  is  in  the  majority  of  cases 
at  a disadvantage  fatal  from  the  start. 

The  theory  that  the  only  profitable  telegraphic  business  is  that  which 
exists  between  the  large  cities  is  a most  mistaken  one.  It  is  a popular 
impression  that  duplicate  lines  between  great  centers  cost  but  little, 


37 


The  Telegraph  in  the  Household. 


that  the  business  thus  controlled  or  divided  is  a prize  worth  struggling 
for,  and  that  the  business  of  the  Western  Union  Telegraph  Company  is 
always  exposed  to  serious  depredations  by  constructions  of  this  character. 
However  true  this  may  be,  as  to  the  possibility  of  dividing  the  business 
and  lessening  the  profit  of  the  Western  Union  Company  thereby,  it  is  an 
undoubted  fact  that  no  profit  is  possible  to  any  competitor  for  this  class 
of  business.  There  is  more  expense  attending  the  gathering  in  of  such 
business,  its  transmission  and  distribution,  than  that  of  any  other 
portion  of  the  traffic  of  the  telegraph  companies.  Take,  for  instance, 
the  single  item  of  numerous  branch  offices  in  cities  of  import- 
ance where  the  business  is  competed  for.  In  New  York  alone  there 
are  150  branch  telegraph  offices,  the  maintenance  of  which  costs  in 
round  figures  $100,000,  which  large  sum  obviously,  largely  goes  to 
reduce  the  profits  on  the  business  transacted  to  a very  meagre  amount. 
The  same  condition  of  things  exists  elsewhere.  In  Philadelphia  the 
branch  Western  Union  Telegraph  offices  number  fifty-five;  in  Chicago, 
one  hundred;  in  St.  Louis,  fifty-five,  and  Cincinnati,  twenty -two.  An 
intelligent  and  expensive  operator  is  always  a requisite  at  these  points, 
while  frequently  there  are  numerous  employes  of  this  class,  with  mes- 
sengers, etc.  In  the  four  cities  named  there  are  382  branch  telegraph 
offices  sustained  at  a charge  of  over  $300,000  per  annum.  This  is  for 
the  sole  purpose  of  gathering  in  and  distributing  the  business,  very 
much  as  lamp-post  boxes  gather  in  the  letters  on  the  corners  of  the 
streets.  Those  who  talk  about  opposition  telegraphs  between  the  great 
cities  must  contemplate  a similar  tax  before  they  can  wrest  it  away  from 
the  Western  Union;  and  to  pay  this  tax  before  the  business  is  even 
transmitted  means  the  total  annihilation  of  profit  to  the  competitor. 

On  the  other  hand,  the  business  contributed  by  the  smaller  towns, 
where  expenses  are  at  their  minimum,  and  where , as  a rule,  the  business 
is  done  on  a commission , the  profits  are  much  greater,  and  although  still 
insufficient,  when  divided,  to  yield  any  return  whatever  to  two  companies, 
in  the  control  of  one  company,  and  in  the  aggregate,  make  possible  a 
good  return.  On  the  other  side,  if  there  is  no  profit,  certainly  there 
is  no  loss,  owing  to  the  arrangement  made. 

Those,  again,  who  contemplate  the  profit  which  arises  out  of  the 
business  between  the  largest  cities  are  misled  by  the  large  receipts  at 
these  central  points,  and  fancy  these  are  all  derived  from  business  trans- 
mitted from  equally  important  points.  A moment’s  reflection  will  con- 
vince the  reader  that  this  is  not  the  case.  The  receipts  at  Chicago  are 
made  up  of  ten  thousand  messages  from  a thousand  points  outside  of 
such  cities  as  St.  Louis,  Milwaukee,  or  Cincinnati.  The  messages  which 
reach  New  York  by  the  hundred  thousand  come  from  all  quarters  of  the 
continent,  beside  Boston,  Providence,  Philadelphia,  Washington, 
Chicago,  or  other  great  cities.  To  control  the  traffic  concentrating  in 
the  great  centers  presupposes  the  existence  of  facilities  at  every  point, 


38 


A Talk  on  Telegraphic  Topics. 


which  under  existing  circumstances  of  preoccupation  by  the  Western 
Union  is  a financial  impossibility. 

The  probability  of  the  construction  of  competing  lines  to  more  than 
2,000  places  out  of  the  14,000  localities  occupied  by  the  Western  Union 
Company  is  very  slight  indeed.  No  sane  man,  or  body  of  men,  would 
think  of  expending  money  for  the  construction  of  lines  to  places  that 
could  by  no  possibility  pay  expenses  of  operating.  Capital  is  too  timid 
to  be  tempted  into  such  undertakings.  There  are  only  1,500  towns  in 
the  United  States  with  populations  of  above  2,000,  and  it  is  doubtful 
if  any  town  with  a population  of  less  than  this  number  could  support  two 
telegraph  offices  with  profit,  or  to  any  better  advantage  than  it  could 
support  two  post-offices.  Estimating  the  number  of  towns  capable  of 
supporting  two  telegraph  offices  each  at  2,000,  there  are  left  some  12,000 
places  in  the  sole  possession  of  the  Western  Union  Company,  and  as 
likely  to  be  exclusively  occupied  by  them  for  all  time  as  they  are  likely  to 
be  served  by  one  post-office.  The  revenue  derived  from  these  12,000 
places,  when  reaching  a common  reservoir,  becomes  enormous ; though 
the  contribution  of  each  is  small,  — they  are  like  rivulets  to  the  streams, 
and  the  streams  which  contribute  to  the  river, — they  go  to  swell  the 
volume  of  the  returns  which  flows  continuously  into  the  Western  Union 
coffers.  Among  the  numerous  crazy  schemes  with  which  the  history 
of  the  telegraph  abounds,  none  have  been  so  crazy  as  to  contemplate 
the  construction  of  a system , at  all  equal  in  extent  or  comprehensiveness, 
to  that  now  possessed  by  the  Western  Union  Company. 

This  system,  too,  has  found  an  indefinite  extension  by  the  appliance 
of  the  telephone,  the  companies  using  the  existing  patent  rights  on  that 
wonderful  invention  being  allied  exclusively  with  the  Western  Union 
Telegraph  Company.  Thus,  small  towns  in  which  telegraph  offices 
are  located,  centers  for  numerous  villages  adjacent,  are  placed  in 
communication  with  these  outlying  districts  by  a telephone  attachment 
at  the  ear  of  the  operator.  Messages  are  now  transmitted  by  the 
telephone  to  and  from  the  telegraph  office  from  localities  three  times 
as  numerous  as  were  within  reafch  three  years  ago.  Hence  the 
Western  Union  Company,  instead  of  having  only  fourteen  thousand 
offices,  with  which  immediate  communication  can  be  had,  have  now 
practically  thirty  thousand,  and  in  a very  short  time  will  have  fifty 
thousand  distinct  localities,  practically  inaccessible  to  any  other  line  or 
system.  It  would  be  impossible  to  conceive  an  undertaking  more  com- 
prehensive and  more  complete  in  its  details  for  gathering  together 
the  threads  of  communication  all  over  this  vast  country.  Even  now, 
with  the  telephone  yet  in  its  infancy,  there  is  hardly  a suburb  attached 
to  any  city  but  shows  many  private  houses  and  manufactories  directly 
connected  by  the  telephone  with  the  telegraph  office,  and  this  con- 
nection  is  solely  with  the  Western  Union  lines , so  that  the  facility  of 


Competition — A Fallacy  and  a Blunder.  39 


communication  by  residents  of  every  outlying  locality,  however  remote 
or  insignificant,  is  just  as  great  as  if  each  lived  next  door  to  a telegraph 
office.  All  this  is  without  expense  to  the  Western  Union  Company, 
who,  in  fact,  participate  in  the  profits  by  their  large  royalty  interest  in 
telephone  patents  and  companies.  To  think  for  a moment  that  any  other 
telegraph  company  can  ever  approach  this  organization  in  the  complete- 
ness of  its  facilities  for  communication  with  localities,  business  establish- 
ments, and  even  private  residences,  is  to  imagine  a success  beyond  the 
dreams  of  the  most  sanguine,  even  among  that  class  of  visionaries  so 
numerous  in  telegraph  circles.  In  fact,  it  would  seem  almost  as  if  the 
Western  Union  Company  had  a greater  share  of  the  control  of  the 
mysterious  electric  current  at  its  disposal  or  command  than  any  and  all 
the  other  organizations  in  the  world.  With  the  wisdom  and  enterprise 
which  have  thus  far  marked  its  career,  no  other  company  can  deprive  the 
Western  Union  of  the  immense  advantages  it  has  secured,  or  its  pro- 
prietors of  the  profits  sure  to  result  to  them  in  the  future  as  in  the  past. 

Every  business  man  will  recognize  the  fact  that  good  management  is 
the  basis  of  all  commercial  success.  It  is  only  by  a miracle  that  a busi- 
ness, even  of  a restricted  character,  can  make  any  satisfactory  or  profit- 
able progress  which  lacks  skillful  and  judicious  management.  But 
when  the  business  attempted  is  of  an  extended  and  well-nigh  universal 
character,  covering  thousands  of  miles  of  territory,  with  numerous  em- 
ployes and  a corresponding  possibility  of  shortcoming,  no  one  can  for  an 
instant  imagine  that  success  is  probable,  unless  the  highest  degree  of 
business  ability  is  secured.  Experience,  which  in  telegraphic  busi- 
ness is  so  essential  to  success  : expert  knowledge,  which  is  a necessity 
to  its  conduct,  and,  above  all,  the  development  of  capacity,  rare  in  all 
walks  of  life ; these  three  qualities  are  more  needed  in  this  business  than 
in  almost  any  other ; yet  they  are  the  least  available  for  outside  tele- 
graphic enterprises.  It  is  safe  to  say  that,  with  one  or  two  exceptions, 
the  opposition  telegraphic  enterprises  of  the  past  have  contained  fewer 
elements  of  success,  so  far  as  business  capacity  is  concerned,  than  almost 
any  other  business  experiments  that  could  be  named.  This  absence  of 
capacity  accounts  as  much  for  the  want  of  success  of  these  enterprises,  as 
the  other  almost  insuperable  obstacles  they  have  necessarily  to  en- 
counter. In  the  Western  Union  Company  the  highest  degree  of  ability 
obtainable  in  telegraphic  circles  is  to  be  found.  A judicious  liberality 
in  the  remuneration  and  promotion  of  officials  has  been  observed,  and, 
although  the  operations  of  the  Company  — their  extent,  magnitude,  and 
character  — resemble  very  much  those  of  a government,  the  remuneration 
of  the  employes,  and  the  chances  which  are  given  them  of  advancement, 
resemble  more  those  of  a private  enterprise  than  the  opportunities  usually 
presented  by  any  Government.  At  any  rate,  it  commands,  in  a greater 
degree  than  any  similar  organization,  the  services  of  the  highest  class 


40 


A Talk  on  Telegraphic  Topics. 


of  men  best  adapted  to  the  promotion  of  its  interests;  and  a long  period 
of  experimental  business  would  be  necessary  for  any  other  company  to 
attain  to  anything  like  equal  perfection  in  its  staff  of  employes  at  a 
price  permitting  anything  like  a profit.  It  is  true  that  by  the  promise 
of  high  salaries,  long  engagements,  large  business,  and  the  like,  em- 
ployes are,  from  time  to  time,  seduced  into  new  undertakings  to  a 
limited  extent;  but  the  frequent  failure  which  has  come  to  all  such  en- 
terprises, and  the  eventual  loss  of  time,  employment,  and  money  incurred 
through  forsaking  the  old  company,  is  yearly  causing  the  Western  Union 
staff  to  be  more  conservative  and  cautious  in  what  they  do.  It  would 
require  a very  large  amount  of  brilliant  promises,  backed  by  a good  deal 
of  absolute  money  advanced,  altogether  out  of  proportion  to  the  possi- 
bility of  profit  under  competition,  to  get  possession  of  a staff  of  men 
competent  to  carry  out  anything  like  a successful  programme  of  op- 
position to  the  Western  Union  Company. 

In  truth,  the  Western  Union  Telegraph  Company  may  be  more 
aptly  compared  to  an  Army  of  Occupation  than  almost  any  other  organ- 
ization in  the  country.  Presided  over  by  a General  of  experience  and 
renown,  its  employes  are  a host  distributed  in  ranks  and  divisions,  and  in 
a possession  of  the  country  more  complete  than  could  be  otherwise 
acquired,  except  by  peaceful  acquiescence  following  upon  necessity,  use- 
fulness, and  efficient  service.  No  competing  company  could  supplant 
it  or  lessen  its  hold  upon  vast  portions  of  its  territory,  so  completely 
preoccupied.  To  believe  so  would  be  to  believe  that  capital  could  be 
turned  into  channels  utterly  unprofitable,  unsafe,  and  disastrous.  One 
might  as  well  try  to  induce  water  to  run  up  a hill.  New  inventions  of  an 
experimental  character,  such  as  automatic  systems  and  postal  telegraph 
devices  and  the  extension  of  telephonic  facilities,  may  threaten  the  com- 
pleteness of  the  grasp  which  the  Western  Union  Company  has  upon 
the  power  of  instantaneous  communication  in  this  country,  but  until 
there  is  some  better  evidence  of  ability  to  compete,  with  profit,  with  the 
perfection  of  system  attained  by  this  company,  no  fear  need  be  enter- 
tained but  that  it  will  retain  its  capacity  to  earn  in  larger  proportion 
than  almost  any  other  enterprise  in  the  country. 

There  is  hardly  any  investment  outside  of  one’s  own  control  but 
what  is  exposed  to  competition  from  duplication,  from  inventions,  or 
from  the  discovery  of  hitherto  unknown  forces.  But  it  may  be  claimed 
for  the  Western  Union  Company,  with  its  long  career  of  success,  the 
enormous  amount  it  has  earned  and  paid  to  its  share-holders,  and,  above 
all,  the  large  space  it  fills,  daily  and  hourly,  in  the  commercial  and 
social  fabric  of  the  country,  that  it  has  certainly  a basis  of  safety  in  the 
future  for  a success  equal  to  that  achieved  in  the  past. 

Suppose  that  the  Western  Union  Company,  as  is  now  said  to  be  the 
case,  decides  that  it  will  absorb  no  more  opposition  telegraph  enterprises. 


Prospects  of  Opposition  Poor. 


41 


What  is  to  become  of  undertakings  of  this  character?  The  hope  that 
they  will  be  taken  in  is  the  basis  for  numerous  opposition  enterprises; 
but  that  hope  abandoned,  what  likelihood  is  there  that  capital  will  be 
induced  in  this  direction  with  any  possible  prospect  of  profit,  in  view 
of  the  fact,  now  notorious,  that  every  individual  opposition  enterprise 
heretofore  inaugurated  has  resulted  in  loss.  If  there  is  no  prospect  of 
profit  by  absorption,  or  by  continuing  the  business,  what  is  to 
become  of  opposition  telegraph  lines  ? The  capital  invested  in 
them  can  never  be  recalled  or  repaid.  The  money  is  scattered  in 
poles  and  wires  along  the  post-roads  of  the  country,  and  is  as  effect- 
ually lost  as  if  it  were  cast  into  the  sea.  The  property  could  not  be 
sold  for  one-tenth  of  its  cost ; the  poles  could  not  be  dug  up  and  used 
except  for  firewood  and  fence-posts ; while  the  wire,  after  years  of 
exposure,  is  only  fit  to  be  sold  to  farmers’  wives  for  clothes  lines  or  inclos- 
ures. In  fact,  the  lines  may  become  a serious  charge,  for  unless 
maintained  as  long  as  they  exist  serious  damage  may  result  to  people 
along  the  roads  by  falling  wires  and  poles,  and  actions  for  damages 
against  share-holders  for  want  of  due  diligence  in  care  of  the  property 
must  prevail. 

A favorite  mode  for  the  promotion  of  new  telegraph  schemes  of  late 
years  has  been  to  issue  bonds,  and  to  use  the  money  derived  from  the 
sale  thereof  for  the  building  of  the  lines.  Of  all  the  securities  with  which 
the  market  has  been  tempted  there  is  nothing  so  weak  as  a telegraph 
bond,  unless,  indeed,  it  is  based  upon  a business  already  developed. 
The  value  of  the  property,  unless  based  upon  an  earning  power,  is  at 
best  but  small ; it  is  widely  diffused  and  utterly  unrealizable,  and  unless 
there  is  a certainty  of  business  success,  there  is  a sure  prospect  of 
loss  of  interest,  and  an  equal  prospect  of  loss  of  principal.  To  expect 
that  interest  will  be  paid  by  an  opposition  telegraph  company,  when  thus 
far  not  one  has  paid  even  its  expenses,  is  to  imagine  what  may  be 
regarded  as  an  impossibility.  It  is  true  that  some  telegraph  organiza- 
tions already  existing,  having  sole  possession  of  a limited  field,  may 
have  bonds  that  are  desirable.  But  a security  of  this  kind,  forming  the 
basis  of  a competitive  undertaking,  in  a business  which  can  by  no  pos- 
sibility pay  the  expenses  of  two  concerns,  is  an  investment  of  so  venture- 
some a character  as  to  deter  prudent  well-informed  men  from  making 
it.  Any  opposition  telegraph  company,  handicapped  with  an  interest 
account  which  a heavy-bonded  indebtedness  implies,  absorbing  a great 
proportion  of  its  revenue,  has  a hopeless  prospect  indeed.  If  competi- 
tive telegraphy  is  to  be  built  up  by  the  issue  of  bonds,  based  upon 
little  else  than  thin  air,  the  chances  of  its  success  are  more  uncertain 
than  ever ; and  the  possibilities  of  serious  results  to  the  Western  Union 
Company,  in  possession  of  the  territory,  are  more  than  ever  remote,  and 
its  stock  proportionately  safe  from  this,  its  only  great  danger. 


CORRESPONDENCE  RESUMED. 


Pittsfield,  Mass.,  June  2d,  1882. 

My  dear  Mr.  Richards  : I have  read  with  very  great  interest  the  documents  you 
have  sent  to  me  regarding  the  Western  Union  Telegraph  Company,  prepared 
with  such  evident  care  and  knowledge  of  the  subject,  by  your  friend,  for  his  cor- 
respondents in  England.  Some  ideas  which  have  never  before  occurred  to  me 
have  been  developed,  and  were  it  not  that  the  whole  production  is  tinctured  with 
a degree  of  special  pleading  on  behalf  of  the  Western  Union  Company,  I should 
be  convinced  that  the  property  was  a most  desirable  one  to  hold  some  shares  in. 
Notwithstanding  the  fact,  however,  that  the  evident  bent  of  your  friend  is  in  favor 
of  this  Company  to  such  an  extent  that  it  would  almost  appear  as  if  he  was  in  their 
interest,  yet  in  the  points  he  has  made  I do  not  readily  see  how  many  of  them 
can  be  controverted,  or  the  conclusions  which  inevitably  follow  their  admission 
be  put  out  of  sight.  I wish  you  would  convey  to  him  my  thanks  for  the  infor- 
mation he  has  developed,  because  I believe  that  he  merits  some  acknowledgment 
for  the  industry  and  skill  he  has  displayed. 

Notwithstanding,  however,  all  the  favorable  conclusions  which  would  follow 
the  points  thus  far  presented  on  behalf  of  the  Western  Union  Company,  there 
are  still  a number  of  troublesome  questions  which  one  encounters,  and  which 
it  would  be  most  desirable  to  have  answered.  These  questions  come  to  me 
from  various  quarters,  and  are  mostly  those  which  I got  when  talking  with 
brokers  or  friends  who  come  into  contact  with  them  in  Wall  street.  These 
points  seem  to  be  the  stock  in  trade  of  a class  of  operators  in  the  Stock  Exchange 
who,  either  from  a disposition  to  decry  the  Western  Union  Company,  or  a hope 
that  they  being  “ short  ” of  the  stock  are  on  the  right  side  of  the  market,  are  dis- 
posed to  criticise  and  depress  the  value  of  the  property.  I believe,  so  far  as  I 
can  gather,  that  there  is  more  antagonism  to  this  stock  among  brokers,  room- 
traders,  and  operators  generally  in  Wall  street  than  to  almost  any  other  on 
the  list.  Indeed,  so  much  is  this  the  case  that  to  take  advice  in  this  quarter 
would  be  to  destroy  one’s  confidence  in  almost  any  investment  that  can  be 
named  at  present  quotations.  But  especially  is  this  the  case  in  regard  to 
Western  Union.  It  is  possible  that  the  talk  of  myself  and  friends  has  been 
with  those  who  are  called  “ bears,”  and  whose  whole  disposition  is  to  depreciate 
the  condition  of  the  country,  and  especially  to  quarrel  with  the  existing  values  of 
stocks,  no  matter  how  productive  or  promising  they  may  be.  The  influence  of 
the  points  raised  by  this  class  is  so  great,  however,  that  before  deciding  upon  any- 
thing I should  like  to  lay  before  you  a few  specific  queries,  which  perhaps  you 
can  explain.  I will  inclose  in  this  letter  a number  of  questions,  with  blanks 
after  each,  which  if  you  like  you  can  have  answered  and  returned  to  me  at  your 


Mistaken  Mentors. 


43 


convenience.  My  friends  and  myself  will  then  come  to  some  conclusion  regard- 
ing a considerable  investment  in  Western  Union,  which  may  have  a good 
deal  of  influence  upon  others  in  our  locality.  The  stock  at  its  present  price  is 
extremely  attractive,  even  for  speculative  purposes,  and  if  your  friend’s  conclu- 
sions, or  anything  like  them,  are  to  be  relied  upon,  I should  like  to  be  able  to 
decide,  before  any  considerable  advance  is  established,  so  as  to  get  the  advantage 
of  any  rise  in  price,  which,  as  the  crops  promise  well  and  other  circumstances 
seem  so  favorable,  may  take  place  at  any  moment. 

I am,  truly  yours,  G.  Francis  Barker. 

New  York,  June  6th,  1882. 

My  dear  Mr.  Barker:  Yours  of  the  2d  inst.  is  received  enclosing  me  some 
questions  regarding  the  Western  Union  Telegraph  Stock,  to  which  you  desire 
answers.  I have  not  had  time  myself  to  give  the  matter  much  attention,  but  I 
placed  the  questions  in  the  hands  of  a well-posted  party,  somewhat  of  an  operator 
in  the  Street,  and  generally  familiar  with  matters  in  that  direction,  though  at  the 
same  time  not  unduly  under  the  influences  which  prevail  in  that  quarter.  I am 
not  qualified  to  confirm  or  deny  all  the  answers  given,  so  you  must  take  the  con- 
clusions he  arrives  at  for  what  they  are  worth. 

I am  not  surprised  that  you  should  be  puzzled  at  the  conflicting  stories  you 
hear  about  Western  Union  and  other  stocks  from  Wall  street.  As  a center  of 
information,  it  is  the  most  uncertain  place  in  the  world.  The  silliest  rumors  find 
credence,  and  the  more  sensational  the  story  the  quicker  it  is  circulated,  regardless 
of  its  truth.  The  beliefs  or  the  disbeliefs  of  the  average  street  operator,  as  to  the 
worth  of  a stock,  are  of  no  value  whatever  as  against  facts  accessible  to  any  intelli- 
gent investor.  To  what  extent  stock-brokers  themselves  are  beguiled  you  will 
j udge  when  you  are  told  that  fully  a hundred  members  of  the  Exchange,  some  weeks 
ago,  caught  eagerly  at  “ points  ” put  out  by  some  shrewd  oil  dealers,  that  there 
soon  would  be  a great  rise  in  petroleum.  Stock -brokers  know  that  petroleum  is 
“ a perfume  by  day  and  a flame  by  night,”  but  beyond  this  their  information 
must  have  been  of  the  slimmest  kind,  for  they  purchased  heavily  of  “ crude  certifi- 
cates” at  seventy-nine  cents  per  barrel,  in  tanks,  which  are  now  worth  only  fifty- 
one  cents,  a decline  of  over  twenty-five  per  cent,  in  less  than  thirty  days.  If,  on 
the  day  this  oil  was  bought  you  had  asked  which  was  the  most  desirable  invest- 
ment, Western  Union  Stock  at  eighty-one  or  oil  certificates  at  seventy-nine,  the 
latter  would  have  been  pressed  assiduously  upon  you,  notwithstanding  the  fact 
that  oil  earns  no  interest,  and  of  necessity  rather  diminishes  than  increases,  and  is 
the  most  uncertain  of  products  ; yet  investment  therein  would  have  been  urged 
rather  than  in  Western  Union,  paying  promptly  a liberal  return  by  efficiently 
fulfilling  a want  in  the  community  essential  to  its  existence.  I mention  this  only 
to  illustrate  the  quality  of  wisdom  which  prevails  on  Wall  street,  among  those 
who  glibly  discourse  about  the  value  of  something  they  know  just  enough  about 
to  learn  that  “ a little  knowledge  is  a dangerous  thing.” 

Hoping  soon  to  hear  from  you  again,  and  reminding  you  that  the  condition 
of  the  market  continues  favorable  to  a purchase  of  various  stocks  for  investment 
purposes,  I am,  truly  yours, 

John  Richards. 


QUESTIONS  PUT  AND  ANSWERED. 


Question  No.  i. — How  do  you  explain  the  fact  that  the  Western  Union  Tele- 
graph stock  is  quoted  so  low  as  82  to  85  for  100  par  value,  while  at  the  same 
time  it  is  earning  and  paying  a cash  dividend,  at  the  rate  of  six  per  cent,  per 
annum  ? 

Answer. — Because  of  the  largeness  of  the  capital,  eighty  millions,  and  the 
supposed  prevalence  of  “ water”  in  it,  and  because  there  is  always  a large 
amount  of  it  on  the  market,  which  the  investment  demand  has  not  absorbed  in 
anything  like  the  proportion  which  the  merit  of  the  stock  from  its  profitableness 
would  seem  to  warrant.  The  vast  majority  of  the  investment  public  seem  never 
to  have  understood  the  safety,  permanence,  or  productiveness  of  this  stock, 
blinded  probably  by  the  fear  of  competition  and  future  complications,  arising 
from  the  operations  of  large  owners  of  the  property,  and  a general  want  of 
knowledge  of  its  earning  power  and  real  worth.  It  is  said,  however,  that  in 
this  respect  there  is  a very  material  change,  and  that  purchases  to  a very  con- 
siderable extent  have  been  made  within  the  last  six  months  for  permanent  hold- 
ing, by  parties  who  have  satisfied  themselves  of  the  increasing  value  of  the 
property  and  its  earning  powers.  Doubtless,  the  facility  with  which  the  capital 
has  been  increased  from  very  small  sums  to  eighty  millions,  has  had  an  influ- 
ence, and  fears  are  perhaps  entertained  that  by  some  other  similar  operations, 
the  existing  quotations  might  be  lessened  and  the  property  depreciated.  But 
bearing  in  mind  the  fact  that  all  permanent  holders  of  Western  Union  Stock 
have  been  hitherto  immensely  benefited  by  these  continuous  processes  of  enlarge- 
ment of  the  capital,  there  seems  now  no  reason  to  fear  but  that  a similar  advan- 
tage would  flow  to  those  who  become  possessed  of  it  at  this  moment,  if  any 
further  amalgamations  should  be  forced  upon  it,  which,  by  those  familiar  with 
the  subject,  and  authorized  to  speak,  is  considered  extremely  doubtful. 

Question  No.  2. — Have  the  quarterly  dividends  of  $1,200,000  which  have  been 
paid,  being  at  the  rate  of  six  per  cent,  on  eighty  millions,  been  actually  earned 
by  the  company,  or  have  assets  possessed  by  it  been  disposed  of  to  make  up  the 
deficiency  ? What  special  significance  was  there  in  the  determination  expressed 
in  the  quarterly  report  made  in  March,  wherein  it  was  stated  that  hereafter  ail 
extensions  should  be  paid  for  out  of  properties  acquired  and  on  hand,  leaving 
all  the  earnings  to  be  made  available  for  dividends. 

Answer . — The  statistics  of  the  company  for  a number  of  years  indicate  a 
growth  in  the  receipts  over  expenses  quite  ample  to  pay  the  annual  six  per  cent, 
dividend  of  $4,800,000.  Even  prior  to  the  enlargement  of  the  capital  from  forty 


45 


Questions  Put  and  Answered. 


one  to  eighty  millions,  the  receipts  over  expenses  implied  an  ability  to  pay  divi- 
dends quite  equal  to  that  now  demanded.  Thus,  in  1879,  the  receipts  were 
$10,960,000,  expenses  $6,160,000;  profits  $4,800,000.  In  1880,  receipts  were 
$12,782,000,  expenses  $6,948,000;  surplus  profit  $5,834,000.  In  1881,  the  first 
year  with  the  increased  capital,  the  receipts  were  $14,393,000,  the  expenses 
$8,485,000 ; surplus  profit  $5,908,000.  This  year  the  receipts  will,  it  is  esti- 
mated, be  $16,000,000,  and  expenses  about  $9,000,000,  surplus  about  $7,000,000, 
while  only  $4,800,000  is  required  to  pay  a dividend  of  six  per  cent.  It  there- 
fore seems  impossible  to  get  away  from  the  fact  that  the  concern  is  earning 
enough  to  pay  easily  the  amount  it  is  accustomed  to  divide  among  its  share- 
holders. 

With  regard  to  paying  for  extensions  with  assets  on  hand,  the  explanation 
is  that  the  company  had  become  possessed  of  a very  large  amount  of  various 
properties  which  was  yielding  it  only  a small  return,  and  it  was  thought  that  a 
sale  effected  at  a large  advance  upon  cost  and  the  investment  of  the  proceeds 
on  its  own  property  would  result  much  more  satisfactorily  than  if  these  outside 
assets  were  held  continuously  in  their  present  condition.  The  wisdom  of  the 
decision  has  never  been  questioned  by  those  familiar  with  the  subject.  The 
board  of  directors  who  passed  upon  it,  and  who  are  possessed  of  so  much  sagacity 
and  knowledge  of  business,  would  hardly  consent  to  an  arrangement  of  the  kind 
unless  it  possessed  the  merit  of  being  the  best  step  possible  for  the  interests  of 
the  stock,  of  which  they  themselves  as  a body  hold  the  largest  proportion. 

Question  No.  3. — Why  is  it  necessary,  in  order  to  pay  a dividend  of  six  per 
cent.,  that  the  revenues  of  so  large  a portion  of  each  quarter  should  be  estimated  ? 
Thus,  the  quarterly  reports  seem  to  read  something  like  as  follow  : “ The  first 
month  we  know  what  we  earned ; the  first  half  of  the  second  month  we  are 
pretty  sure  of,  and  the  other  six  weeks  we  guess  at,  and  therefore  we  declare  a 
dividend.,,  If  the  distribution  of  so  large  a sum  as  $1,200,000  is  to  be  the  result 
of  guess-work,  might  the  guess  not  be  on  the  wrong  side,  and  the  dividend  an 
error  ? 

Answer . — In  view  of  the  fact  that  the  money  received  by  the  Western  Union 
Company  is  taken  in  at  fourteen  thousand  distinct  and  different  points,  of  course 
it  is  an  impossibility  that  accounts  should  all  be  at  hand  within  fifteen  days  after 
the  close  of  the  quarter.  But  as  the  business  is  a purely  cash  one,  and  the  money 
is  almost  all  actually  received  before  the  accounts  can  be  closed,  there  seems  to 
be  no  good  reason  why  it  should  not  be  divided.  It  would  certainly  be  much 
more  satisfactory  to  share-holders  to  know  that  the  money  in  hand  is  thus 
promptly  distributed,  if  all  indebtedness  is  paid,  rather  than  it  should  be  left 
exposed  to  such  risks  as  are  incident  to  the  care  of  such  large  sums.  The  dis- 
position to  divide  promptly  is  not  usually  criticised  unfavorably ; while  a dispo- 
sition in  the  opposite  direction  would  be  open  to  very  serious  objection. 


Question  No.  4.  — In  how  far  are  the  interests  of  the  share-holders  of  the 
Western  Union  Company  jeopardized  by  the  possession  of  the  largest  individual 
share  of  the  property  by  Mr.  Jay  Gould,  in  view  of  the  fact  that  he  also  has  the 
largest  share  in  the  Mutual  Union  Telegraph  Company?  Is  it  not  likely  that, 
having  made  vast  sums  of  money  out  of  encouraging  opposition  enterprises, 
and  then  selling  them  out  to  the  Western  Union  at  a great  advance  over  and 


46 


A Talk  on  Telegraphic  Topics. 


above  their  original  cost,  he  may  be  inclined  to  repeat  this  operation  indefinitely, 
especially  now  that  the  Mutual  Union  is  practically  within  his  control  ? 

Answer . — The  fact  that  Mr.  Jay  Gould  owns  from  twenty- three  to  twenty- 
five  millions  of  Western  Union  stock,  which,  perhaps,  is  nearly  one-quarter  of 
his  entire  worth,  ought  to  be  an  element  of  strength  rather  than  of  doubt.  Were 
he  entirely  out  of  the  property,  and  ranged  in  opposition  to  it,  controlling  as  he 
does  such  a vast  network  of  railway  lines,  his  hostility  would  be  formidable. 
Being  interested  to  so  large  an  extent  in  the  conservation  of  the  property,  and 
the  increase  of  its  earning  power ; convinced  as  he  must  be  of  the  genuineness 
of  its  value  as  effectually  performing  most  essential  services  to  meet  the  most 
imperative  want  of  the  public  of  this  vast  country,  it  seems  incredible  that  he 
should  do  otherwise  than  maintain  the  integrity  of  its  position  by  all  the  means 
in  his  power.  Such  a temptation  as  he  might  have  to  unload  his  large  holdings, 
and  then  depress  the  stock,  would  probably  defeat  itself  in  the  attempt,  and  cause 
him  to  lose  more  than  he  could  possibly  make  by  any  process  of  absorption  of 
other  companies  which  may  be  attributed  to  him.  He  has  taken  the  pains  to 
surround  himself  with  a very  remarkable  combination  of  Directors,  Managers, 
and  Assistants  of  the  highest  class.  Those  who  watch  narrowly  his  daily  actions 
and  his  continuous  interest  in  the  details  of  the  business,  and  the  benefit  which 
his  shrewdness  and  comprehensive  grasp  has  contributed  to  it,  are  perfectly  con- 
vinced that  among  the  numerous  interests  he  has  acquired,  there  is  none  which 
it  is  more  his  intention  to  cling  to  and  protect  than  the  Western  Union  Telegraph 
business.  According  to  the  public  showing  made  some  time  ago,  he  held  $23,000,- 
000  of  this  stock,  which,  at  present,  yields  him  an  income  of  $1,380,000,  and,  with 
such  extension  and  growth  as  are  likely  to  take  place,  it  may  soon  yield  him  $2,000,- 
000  per  annum.  It  is  an  open  question  in  what  possible  security  he  could  invest 
anything  like  this  amount  of  money  to  get  so  certain  and  so  ample  a return,  so 
that  his  interest,  if  nothing  else,  makes  his  possession  inure  to  the  benefit 
of  all  the  other  share-holders.  As  to  the  Mutual  Union  Telegraph  Company, 
Mr.  Gould  certainly  knows  as  well  as  those  who  have  closely  observed  that 
enterprise,  that  there  are  most  serious  irregularities  in  its  organization,  which, 
according  to  eminent  legal  authority,  cannot  be  cured.  He  also  knows  that 
while  five  millions  of  money  have  been  taken  from  the  public,  in  the  sale  of 
bonds,  less  than  three  millions  have  been  spent  on  the  construction  of  lines,  so 
that  two  millions  remain  to  be  accounted  for  by  some  process  of  discovery  yet 
to  be  developed.  It  is  true  that  this  discovery  is  not  likely  to  be  aided  by  the 
election  to  the  Presidency  of  the  Contractor  who  disbursed  the  money ; nor  by 
the  election  to  the  Vice-Presidency  of  the  Banker  who  enticed  it  from  the  public, 
and  is  supposed  to  have  paid  it  to  the  contractor ; nor  by  the  selection,  for  Gen- 
eral Manager,  of  a gentleman,  not  because  he  knows  anything  about  telegraphy, 
but  because  he  is  the  contractor’s  partner.  But  all  these  circumstances  are  con- 
tributory to  the  process  of  illustrating  how  easy  it  is  to  manage  an  opposition 
telegraph  company  in  its  early  stages,  and  how  effectually  it  may  work  out  its 
fate  if  only  let  alone. 

In  addition  to  this  remarkable  issue  of  bonds  of  five  millions  on  an  expendi- 
ture of  three  millions,  there  has  been  issued  ten  millions  of  stock,  a basis  for 
which  there  seems  not  to  be  a vestige  of  value.  It  is  true  that  many  other 
concerns  have  stock  and  bonds  issued  far  in  excess  of  what  they  may  have  cost, 


Questions  Put  and  Answered. 


47 


but  they  all  possess  more  or  less  earning  power,  while  with  the  Mutual  Union 
Telegraph  Company,  as  indeed  with  nearly  all  opposition  telegraph  enterprises, 
the  losses  commence  at  the  day  of  opening  and  never  cease  ! The  Mutual 
Union  Company  is  loaded  with  an  indebtedness,  at  the  start,  the  interest  upon 
which  is  nearly  $1,000  per  day  for  every  working  day,  while  its  expenses  of 
management,  excessive  salaries,  rentals,  and  other  charges  are  out  of  all  propor- 
tion to  the  extent  and  character  of  its  business.  The  expenses  must  far 
exceed  the  income.  With  the  knowledge  Mr.  Gould  possesses  of  opposition 
enterprises,  and  how  singularly  unsuccessful  they  have  been,  how  he  could  seek 
to  make  anything  of  Mutual  Union  as  claiming  absorption  by  Western  Union 
passes  comprehension.  The  interest  which  he  possesses  in  the  stock,  and  which 
he  bought  for  a mere  song,  was  a purchase  on  behalf  of  the  Western  Union 
Company,  so  that  the  possibility  of  cutting  rates  could  be  avoided,  and  extensions 
further  into  fields  profitable  to  Western  Union  prevented.  Presupposing  the 
interest  in  the  Western  Union  of  Mr.  Gould  to  be  maintained,  even  to  the  extent 
of  one-quarter  of  his  present  holding,  by  no  possibility  could  his  operations  be 
otherwise  than  favorable  to  it,  both  as  regards  his  assistance  in  promoting  the 
business,  and  with  respect  to  such  control  as  he  may  possess  in  opposition 
concerns. 


Question  No.  j. — What  probable  influence  will  the  various  competitive 
enterprises  have  upon  Western  Union  earnings,  such  for  instance  as  the  Balti- 
more and  Ohio,  the  American  Rapid,  the  Banker’s  and  Broker’s,  the  Mutual 
Union,  and  the  Postal  Telegraph  Company,  just  inaugurated?  Are  not  these 
enterprises  likely  to  seriously  diminish  the  receipts  and  profits  of  the  old  com- 
pany, even  if  they  achieve  no  permanent  success  ? 

Anszuer. — There  probably  never  will  be  a time  when  opposition  telegraph  en- 
terprises will  cease.  But  whether  the  time  will  ever  arrive  when  they  will  suc- 
ceed is  a question  which  careful  observers  will  not  hesitate  to  promptly  answer 
in  the  negative,  judging  by  the  experience  of  the  past.  All  the  elements  of 
success  possible  to  any  opposition  enterprise  were  possessed  by  the  Atlantic  and 
Pacific,  and  by  the  American  Union  Companies.  They  had  all  that  could  be 
secured  by  influence,  ability,  railroad  connections,  popular  regard,  and  an  un- 
limited supply  of  money.  But  the  fact  is,  the  revenue  of  neither  of  these  enter- 
prises ever  approached  the  expenditure  necessary  to  carry  them  along.  Although 
they  may  have  injured  the  receipts  of  the  Western  Union  Company  the  progress 
of  the  business  of  that  concern  was  such  that  the  inroads  of  these  two  ably  con- 
ducted competitors  were  never  felt  and  dividends  were  continuously  earned  and 
paid,  and  the  property  extended  in  area  and  increased  in  value,  just  as  if  these 
opposition  companies  had  never  existed.  What  better  chances  or  elements  of 
success  the  new  enterprises  have  which  are  now  before  the  public  it  is  most 
difficult  to  discern.  Largely  experimental,  limited  in  area,  loaded  down  already 
with  obligations,  nothing  need  be  feared  from  them  in  the  shape  of  serious  oppo- 
sition by  the  Western  Union  Company. 

Question  No.  6. — What  significance  had  the  recent  quarrel  with  the  New 
York  Associated  Press  as  to  any  possibility  of  a serious  breach  between  the 
Western  Union  Company  and  the  press  generally? 


48 


A Talk  on  Telegraphic  Topics. 


Answer. — According  to  the  last  annual  report  of  the  company,  the  revenue 
from  the  press  of  the  country  was  over  $1,000,000,  or  8 per  cent,  of  the  entire 
receipts.  Of  the  amount  the  New  York  Associated  Press  paid  less  than  one 
hundred  thousand  dollars,  while  the  balance  was  contributed  by  other  associations, 
and  direct  payments  from  individual  newspapers  for  special  dispatches,  etc.  By 
no  possibility  could  any  considerable  portion  of  this  revenue  be  diverted  from  the 
Western  Union  Company,  for  the  reason  that  no  other  organization  anything  like 
covers  the  area  necessary  to  produce  it.  If  the  news  could  be  gleaned  from  a 
few  points  only,  then  it  might  be  possible,  but  the  public  must  have  news  from 
all  sections  where  events  are  possible,  and  where  are  they  not  ? If  the  Western 
U nion  Company  desired  to  go  into  the  news  business  itself,  and  employ  its  operators 
to  gather  items  of  news,  and  make  a profit  thereon,  retailing  the  information  at 
every  center  of  importance,  it  could  make  a sum  vastly  greater  than  it  now  receives 
from  its  press  service.  That  it  possesses  facilities  for  this  profitable  undertak- 
ing in  its  widespread  operations,  its  cable  connections  and  other  advantages  is 
apparent.  But  it  is  unnecessary  that  this  should  be  done  at  present,  as  an 
arrangement  which  has  been  recently  made  between  the  Western  Union,  the 
New  York  Associated  Press,  and  the  other  associations  covering  the  entire 
country,  is  of  such  a character  that  no  danger  need  be  apprehended  from  this 
source.  On  the  contrary,  the  result  of  the  recent  negotiations  is  likely  to  be  a 
largely  increased  and  permanently  profitable  revenue  from  that  source  and  con- 
fined to  it  exclusively. 

Question  No.  J. — Is  it  not  a fact  that  the  Western  Union  Company  has 
undertaken  obligations  of  a very  onerous  character  in  connection  with  the  Amer- 
ican Cable  Company  ? It  is  alleged  that  the  Cable  cost  to  the  construction  com- 
pany less  than  seven  millions,  and  that  in  handing  it  over  to  the  Cable  Company 
the  capital  was  doubled  and  made  fourteen  millions,  and  that  the  Western  Union 
was  compelled  to  take  it  over  at  this  inflated  amount,  and  pay  five  per  cent,  there- 
upon, or  $700,000  a year,  upon  what  really  only  cost  seven  millions,  or  equal  to 
ten  per  cent,  on  the  real  investment. 

Is  it  not  true  that  in  leasing  the  Gold  and  Stock  Telegraph  Company  and  the 
Cuba  cables,  in  guaranteeing  the  Canada  telegraph  share-holders  a large  inter- 
est, equally  onerous  obligations  have  been  assumed  ? How  about  its  alliance 
with  the  American  District  Telegraph  Company  ? 

Answer. — The  facts  regarding  the  leasing  of  the  American  Cable  Company 
are  that,  owing  to  the  pooling  of  the  cables  and  the  proportion  of  receipts  allot- 
ted to  the  Western  Union,  it  will  be  placed  in  possession  of  a revenue  of 
$1,100,000  a year,  while  the  interest  and  cost  of  operating  account  will  not  exceed 
$800,000,  so  that  there  appears  to  be  a clear  profit,  even  with  the  present  vol- 
ume of  business,  of  $300,000  a year. 

With  regard  to  the  Gold  and  Stock  Telegraph  Company,  nothing  can  be 
more  important  to  the  Western  Union  than  the  control  of  the  vast  business  of 
selling  the  market  reports  throughout  the  country,  and  the  profit,  over  the  six 
per  cent,  payable  to  the  Gold  and  Stock  Company,  is  not  only  considerable,  but 
the  quotation  business  is  being  made  constantly  larger  and  more  profitable  by  the 
free  use  of  the  facilities  of  the  Western  Union  Company.  The  Cuba  cable 
already  pays  a large  return  over  and  above  the  guaranteed  amount,  and  instead 
of  there  being  cause  for  apprehension  regarding  the  three  contracts  referred  to 
— viz.  : the  American  Cable,  the  Gold  and  Stock  Company,  and  the  Cuba  Cable 


Questions  Put  and  Answered. 


49 


— there  is  a certainty  of  a real  gain  of  probably  $750,000  a year,  while  the  com- 
plete and  exclusive  control  of  the  business  to  the  land  lines  connected  with  the 
cables,  and  the  business  arising  out  of  the  enormous  sales  of  quotations  of  the 
products  of  the  world,  it  is  obvious,  is  of  immense  importance. 

With  regard  to  the  guarantee  of  eight  per  cent,  to  Canadian  telegraph  stock- 
holders, the  whole  sum  indorsed  is  a little  over  $200,000;  and  so  far  from  being 
a cause  of  criticism  may  be  considered  one  of  the  most  satisfactory  operations,  in 
a small  way,  ever  consummated.  There  is  hardly  any  possibility  of  the  guaran- 
tee ever  being  called  for,  while  in  compensation  for  giving  it  the  Western  Union 
get  one-half  the  profits  of  the  entire  Canadian  system  over  the  interest  paid, 
which,  in  view  of  the  satisfactory  arrangements  made  by  the  Canadian  Parlia- 
ment, are  likely  in  time  to  be  considerable.  Meanwhile,  they  are  assured  an 
exclusive  connection  and  profit  from  a rapidly  growing  business,  an  absence  of 
competition  springing  from  that  quarter,  undisturbed  possession  of  those  impor- 
tant land  lines,  running  through  Canadian  territory,  connecting  with  the  cables, 
and  other  advantages  only  possible  to  an  alliance  such  as  they  have  made,  and 
which  they  are  cementing  by  liberality  and  good  neighborhood. 

The  same  mutual  advantage  may  be  said  to  exist  in  the  connection  recently 
formed  with  the  American  District  Telegraph  Company.  While  this  will 
afford  the  opportunity  of  important  economies  to  the  Western  Union  Company, 
owing  to  the  magnitude  of  its  delivery  business,  the  use  of  its  vast  facili- 
ties will  give  to  the  District  Company  an  earning  power  adequate  to  make  it 
yield  a liberal  return  on  its  capital,  increasing  its  efficiency  and  permanency 
against  all  comers. 

Question  No.  8 . — Is  it  not  a fact,  that  the  moment  the  price  of  Western 
Union  advances  the  market  is  deluged  with  the  stock  by  Mr.  Gould  and  other 
heavy  holders,  for  the  purpose  of  realizing  money  on  what  has  cost  them  very 
little  in  the  shape  of  hard  cash  ? Is  it  not  true  that  the  possibilities  of  an  advance 
in  the  quotable  value  of  the  stock  is  entirely  out  of  the  question,  so  long  as  the 
market  is  exposed  to  this  deluging  process  ? 

Answer. — There  is  no  justification  for  the  belief  that  Mr.  Gould  desires  to  un- 
load his  large  holdings  of  Western  Union,  which  at  the  recent  public  showing  was 
about  twenty-three  millions  of  dollars ; but,  supposing  he  should  sell  largely, 
what  he  could  do  with  the  proceeds  that  would  pay  him  better,  or  be  more  safely 
invested  than  it  is  now,  is  difficult  to  indicate.  Certainly,  government  bonds  or 
high  class  railway  securities  would  have  no  attraction  in  comparison  as  a money- 
making operation,  because  of  the  high  price  and  the  consequent  low  interest. 
But  even  supposing  that  he  and  other  large  holders  were  to  sell  every  dollar  they 
possess,  what  possible  difference  would  that  make  in  the  earning  power  of  the 
property  itself?  The  change  of  the  proprietorship  of  the  stock  does  not  obliterate 
the  poles,  or  the  wires,  or  the  contracts,  or  lessen  the  necessity  of  the  use  of 
them  one  iota,  or  diminish  the  profits  of  the  business  generally.  The  diffusion  of 
the  stock  among  investors  would  strengthen  rather  than  weaken  it  by  rendering 
it  less  liable  to  fluctuations,  in  consequence  of  the  large  blocks  which  may  be 
thrown  upon  the  market.  As  an  investment  stock,  it  is  a matter  of  no  importance 
who  holds  it,  who  sells  it,  or  in  what  quantities,  so  long  as  its  ability  to  earn 
and  pay  is  unaffected,  and  its  growth  and  steady  progress  are  undiminished. 

4 


ADDENDA. 


FOR  the  special  information  of  those  who  have  not  been  in  the  habit 
of  purchasing  shares  in  incorporated  companies,  dealt  in  on  the  New- 
York  Stock  Exchange,  it  may  be  well  to  say  that  the  evidence  of  the  pos- 
session of  the  property  is  furnished  to  the  purchaser  in  the  shape  of  an 
engraved  certificate,  testifying  to  the  fact  that  the  owner  holds  the  number 
of  shares  he  has  bought,  and  which  cannot  be  disposed  of  to  any  other 
person  except  upon  the  personal  indorsation,  on  the  back  of  the  certificate 
thus  issued,  and  its  cancellation  at  the  office  of  transfer.  This  certificate 
has  all  the  merits  of  a title-deed  to  property.  It  is  a good  warrant  for 
the  collection  of  the  dividends  regularly  declared,  and  is  as  much  a secur- 
ity for  the  amount  it  represents  as  are  the  title-deeds  to  a farm  or  a house. 
It  also  possesses  the  merit  of  being  equal,  in  its  evidence  of  ownership,  to 
a registered  bond.  Should  a certificate  be  lost,  the  laws  of  the  State 
of  New-York,  under  which  the  Western  Union  Company  is  incorporated, 
provide  that  a new  certificate  can  be  issued.  By  no  possibility  can  any 
one  else,  but  the  owner  of  the  stock  whose  name  is  on  the  face  of  the  cer- 
tificate, get  possession  of  this  evidence  of  property  without  the  signature 
of  the  latter  duly  witnessed.  In  this  respect  these  certificates  are  just  as 
good  as  the  registered  bonds  of  the  United  States.  Thus,  from  every 
description  of  loss,  including  that  by  fire,  fraud  and  robbery,  the  owner  is 
safe,  so  long  as  he  does  not  sign  away  his  rights,  in  the  presence  of  a 
witness. 

It  may  also  be  interesting  to  be  told  how  to  become  possessed  of  such 
stocks  as  are  dealt  in  on  the  New-York  Stock  Exchange.  There  are  I,  ioo 
members  in  this  Exchange,  and  a letter  to  any  one  of  them,  ordering  a 
certain  amount  of  stock,  will  be  immediately  responded  to.  The  list  of 
names  at  the  end  of  this  pamphlet  are  among  those  in  whom  perfect 
reliance  may  be  placed.  Should  a purchase  be  decided  upon,  all  that  is 
necessary  is  to  deposit  the  amount  with  your  banker,  write  a letter  to 
some  broker  you  may  select,  requesting  him  to  buy  a certain  amount  of 
stock,  and  as  soon  as  purchased  to  express  the  certificates  thereof  to  the 


Wall  Street  Methods. 


51 


banker,  and  collect  on  delivery.  It  would  be  just  as  well  to  have  the 
bankers  to  certify  on  your  letter  that  the  money  was  on  deposit  for  the 
purpose  named.  Thus,  if  you  wished  to  buy  ioo  shares  of  Western 
Union  stock,  it  would  be  necessary,  at  present  quotations,  say  85,  to 
deposit  $8,512.50,  $8,500  for  the  stock  and  $12.50  the  broker’s  commis- 
sion of  }i  of  one  per  cent,  on  the  par  value  of  $10,000.  This  investment 
would  yield  at  the  rate  of  $600  per  year.  If  a smaller  purchase  is  decided 
upon,  say  50  shares,  the  amount  to  be  deposited  would  be  $4,256.25, 
which  would  yield  at  the  rate  of  $300  a year.  Should  the  stock  advance 
to  90,  or  higher,  of  course  the  amount  to  be  deposited  will  be  just  so 
much  increased,  the  commission  being  the  same  in  all  cases. 

These  simple  particulars  are  furnished  because  this  pamphlet 
is  sent  to  a great  many  who  have  hitherto  not  bought  stock  in  this 
way.  It  will  do  no  harm  to  put  them  in  possession  of  the  modes  to  be 
adopted. 

One  advantage  in  the  purchase  of  dividend  property  on  the  Stock 
Exchange  is  that  there  is  never  any  trouble  in  the  collection  of  the 
interest  which  it  yields.  A check  for  the  amount  of  the  dividend  is 
mailed  in  the  case  of  the  Western  Union  Telegraph  Company’s  stock  — 
for  instance,  to  the  post-office  address  of  each  shareholder,  payable  to 
his  order.  The  income  thereof  may  be  relied  upon  with  a regularity  far 
greater  than  the  interest  upon  an  ordinary  mortgage  or  promissory  note, 
and  it  is  not  dependent  upon  the  weather,  the  crops,  or  the  habits  of  the 
mortgagee  or  promiser,  or  being  favorable  otherwise.  Again,  the  invest- 
ment can  be  realized  upon  at  any  moment  without  any  expense  incurred 
in  foreclosing  and  without  any  legal  delays.  An  investment  made  to-day 
in  Western  Union  stock  can  be  realized  upon  at  any  time;  three 
months  hence,  probably,  at  some  advance,  and  years  hence  with  a very 
considerable  profit.  So  that,  if  the  money  is  needed  it  is  just  as  easy 
to  get  it  as  if  it  were  in  a Savings  Bank,  while  it  is  exposed  to  no 
risks  of  failure,  yields  a good  return,  and  is  progressive  in  value,  which 
hardly  any  other  investment  is. 

The  above  directions  allude  only  to  purchases  for  investment  pur- 
poses and  not  to  speculative  operations.  The  methods  adopted  when 
stock  is  purchased  in  the  expectation  of  an  advance,  or  selling  “ short” 
in  the  expectation  of  a decline,  are  somewhat  different.  The  plan  usually 
adopted  is  to  remit  to  a broker  at  least  $i,ooo,  which  is  ten  per  cent,  mar- 
gin on  one  hundred  shares  of  stock  at  par,  less  than  which  will  hardly 
be  bought  by  a broker  on  speculation.  With  this  margin  to  save  him 
from  loss,  the  broker  will  purchase  the  stock  and  arrange  to  carry  it. 
Every  advance  in  the  price  of  one  per  cent,  means  a profit  to  the 
speculator  of  $100,  and  every  decline  of  one  per  cent,  a loss  of  $100. 
Parties  can  limit  their  loss  by  giving  what  is  called  a “ stop  order”  to 
sell  at  a certain  decline,  or  make  sure  of  a profit  by  a similar  order  in 
case  of  an  advance. 


52 


A Talk  on  Telegraphic  Topics. 


An  illustration  of  an  operation  on  margin  may  be  given  as  follows : 
Western  Union  stock  is  to-day,  say,  eighty-five.  If  a party  thinks  it 
cheap  and  has  reason  to  believe  that  it  will  advance,  he  sends  $1,000  to 
some  broker  whose  name  is  mentioned  at  the  end  of  this  book,  or  $5,000 
if  he  chooses.  For  this  sum  either  one  hundred  or  five  hundred  shares 
will  be  bought  and  carried.  Suppose  an  advance  takes  place  of  five  or  ten 
per  cent.,  the  speculator  would  make  on  his  one  hundred  shares  $500 
or  $1,000,  and  the  same  proportion  on  a larger  purchase.  Should  the 
stock  go  down  five  or  ten  per  cent.,  a loss  would  accrue  of  an  equiv- 
alent amount.  A dividend-paying  stock  like  the  Western  Union  pays 
its  own  interest,  when  it  is  carried  long  enough  to  realize  the  quarterly 
dividends.  Thus  an  operation  extended  long  enough  costs  nothing 
on  account  of  interest,  as  the  interest  the  broker  charges  on  the  amount 
borrowed  to  carry  the  stock  is  repaid  by  the  dividend.  The  only  real 
expense,  therefore,  is  the  commission  of  $12.50  on  each  purchase  or 
sale  of  one  hundred  shares. 


Established.  18G4. 


COLEMAN  BENEDICT  & CO. 

24  Broad  St.  New- York, 

STOCKS  AND  BONDS. 

A strictly  commission  business  conducted  in  the  purchase  and  sale  of 
Stocks  and  Bonds  on  Margin  or  for  Investment. 

Complete  Financial  Report  issued  weekly  to  our  Correspondents. 
Both  members  of  the  firm  are  members  of  the  N.  Y.  Stock  Exchange. 
Coleman  Benedict.  James  McGovern,  Jr. 


R.  J.  KIMBALL  & CO. 

[established  in  1865.] 

BANKERS  AND  BROKERS,' 

40  Broadway,  New-York. 

Our  firm  consists  of  Three  Members  of  the  New-York  Stock 
Exchange.  All  orders  are  executed  by  a member  of  the  firm,  in  the 
Exchange. 

We  give  personal  attention  to  making  investments  in  dividend-pay- 
ing securities,  in  any  lots  from  five  shares,  upwards. 

First  class  securities  carried  on  margin. 

Robert  J.  Kimball.  Alfred  B.  Lounsbery.  Fred.  E.  Ballard. 


d.  A.  BOODY. 

REUBEN  LELAND. 


P.  O.  Box  447.  C.  w.  MCLELLAN,  Jr. 

F.  G.  SALTONSTALL. 

BOODY,  McLELLAN  & CO. 
Bankers, 

58  Broadway,  cor.  Exchange  Place,  New-York. 

BUY  AND  SELL  ON  COMMISSION,  FOR  CASI^  OR  ON  MARGIN,  ALL  SECURITIES 
DE^LT  IN  ^ T TtjE  NEW-YORK  STOCK  EXCHANGE. 

Interest  allowed  on  Deposits,  subject  to  Check  at  Sight. 
CORRESPONDENCE  INVITED. 

BRANCH  HOUSE,  128  La  Salle  Street,  CHICAGO. 


J.  W.  Gordon. 


j.  D.  Harris. 


W.  M.  Donald, 

Member  N.  Y.  Stock  Exchange. 

DONALD,  GORDON  & CO. 

No.  8 Broad  Street,  New- York, 

BANKERS  AND  BROKERS. 

All  Securities  dealt  in  at  the  New-York  Stock  Exchange 
Bought  and  Sold  for  Cash,  or  on  Margin. 

CORRESPONDENCE  SOLICITED. 


W.  E.  CONNOR  & CO. 

71  Broadway,  New-York, 

BANKERS  AND  BROKERS. 

Stocks,  Bonds,  and  Miscellaneous  Securities,  Bought  and 
Sold  on  Commission. 


TILGHMAN,  ROWLAND  & CO. 

Stock  Brokers, 

54  Exchange  Place,  New  York. 

Stocks,  Bonds,  Governments,  Bought  and  Sold  on  Commission,  for 
cash  or  on  margins. 

Stocks  and  Bonds  bought  in  amounts  to  suit  investors.  Car  Trust 
Certificates.  Railroad  Paper. 

S.  Tilghman,  Geo.  Rowland,  F.  B.  Tilghman, 

Member  N.  Y.  Stock  Ex.  Member  Chicago  Stock  Ex.  Member  Chicago  Stock  Ex. 


Spencer  Trask . 


Geo . F Peabody . 


Fred \ B.  Noyes. 


Spencer  Trask  & Co. 

Bankers  and  Brokers, 

70  Broadway,  and  15  New  Street, 

City  of  New- York, 

Members  of  the  N.  Y.  Stock  Exchange, 

Transact  a General  Banking  Business . 

Ill  classes  of  Securities  Bought  and  Sold  on  Commission  and  Carried  on  Margin, 
laily  Market  Letters  sent  to  Customers.  Correspondence  promptly  attended  to. 

Interest  allowed  on  Deposits. 

Subject  to  Draft  at  Sight . 

BRANCH  OFFICES — connected  by  private  wires. 


Albany,  N.  Y. 

65  & 67  State  Street, 

W.  A.  Graves. 


Philadelphia, 

132  South  Third  St. 

C.  F.  Fox. 


Saratoga  Springs, 

Grand  Union  Hotel. 


I. 


